Although people in Estonia have seen a slight increase in savings overall in recent months, individual amounts are very unevenly distributed among the population.
"During the coronavirus crisis, people saved a lot, both out of caution and because some services were simply not available. As a result, the growth in savings was very rapid, well above 10 percent. After the coronavirus crisis, savings declined and people started to use their savings from the crisis period with renewed vigor, because once again it was possible to travel and use other services. As a result, savings growth slowed down," said Taavi Raudsaar, economist at Bank of Estonia (Eesti Pank).
Last year's rapid price increases along with a rise in spending, reduced people's ability to save and caused deposit growth to stop, and even fall in some months.
According to Raudsaar, the volume of savings has increased slightly again over recent months. At the end of October, Estonian resident households had 4.5 percent more savings on average than a year earlier.
"Firstly, price growth has slowed down and wage growth is once again outpacing price growth. Second, the rise in interest rates has caused people to shift their money from demand deposits to time deposits," Raudsaar said.
Last year, interest rates on fixed-term deposits were close to zero, but now banks are paying an average of 4.5 percent interest per annual deposit.
According to Bank of Estonia, Estonian households' total savings amounted to €11.6 billion in October this year, €51 million more than in September and €499 million more than in October 2022. The volume of fixed-term deposits increased by 147.8 percent over the year.
Bank of Estonia's Financial Behavior Survey confirmed that people were more likely to use their savings last year, when prices were rising fast, and that the situation has now stabilized or even improved slightly.
Raudsaar said, that excluding so-called payday-to-payday money, in September 2021, 65 percent of private individuals said they had savings in bank deposits. In the same month last year that figure had fallen to 58 percent, while it was up slightly to 59 percent in September 2023.
While the central bank does not collect data on average annual deposits, its latest survey, in 2021, showed an average deposit size of €17,600.
However, the distribution of savings is uneven, with the median household in Estonia, meaning half of which have more deposits and half of which have less, found to have €4,300 worth of deposits.
Editor: Michael Cole