Scared straight from coronavirus, people to save money like they did after Great Depression

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Published: June 17, 2020 6:17 PM

Households across the world are likely to save more as the coronavirus pandemic has impacted businesses, jobs and the economy.

The urge to save more is likely to be similar to what people did after the Great Depression.

Households across the world are likely to save more as the coronavirus pandemic has impacted businesses, jobs and the economy. In fact, the urge to save more is likely to be similar to what people did after the Great Depression. “Increase in precautionary savings for households, similar to what we saw after the Great Depression in the 1930s,” a Deutsche Bank research report said on behavioural change expected in coming quarters. Spendings are expected to decrease across varied sectors such as travel and tourism which will result in lower consumer spending.

Among other changes, online shopping is likely to see a boom as more and more people choose to stay at home. “Limits on the number of people in supermarkets at the same time, more online shopping, more online doctor visits,” the report said. Public spaces such as restaurants, cinemas, sport events, concerts, conferences, trains, busses, and airplanes will also see a lesser inflow of crowd. The fear of public spaces will also lead to adoption of own vehicles as people will choose to avoid public transports. In recent years, ride sharing platforms have gained prominence in cities across the globe as a convenient alternative to own vehicles. However, what becomes of these companies in the aftermath of coronavirus is yet to be seen. 

The consumer confidence situation in India hasn’t been promising as well. While the coronavirus situation has severely impacted businesses and economy, India was already under an economic slowdown which was visible in sectors ranging from real estate, automobile to FMCG with people reducing purchases of household essential items such as oil and soaps, according to various reports and industry leaders.

However, due to coronavirus, the consumer confidence fell to its lowest levels in six years in May 2020 as people remained pessimistic about income and jobs, according to RBI’s survey on consumer confidence. “Consumer perception on the general economic situation, employment scenario and household income plunged deeper into contraction zone; while expectation on general economic situation and employment scenario for the year ahead were also pessimistic,” the central bank said in its latest survey. The situation is unlikely to improve till the next year. 

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