The implications of savings accumulated during the pandemic for the global economic outlook

The coronavirus (COVID-19) pandemic has led to the accumulation of a large stock of household savings across advanced economies. Owing to their large size, the savings accumulated since early 2020 could significantly influence the post-pandemic recovery path. The central question is whether households will spend heavily once pandemic-related restrictions are lifted and consumer confidence returns, or whether other motives (e.g. precautionary, deleveraging) will keep households from spending their accumulated excess savings. This box reviews the main economic arguments supporting the hypothesis that any reduction in the accumulated stock of savings is likely to be limited in the medium term. However, given the considerable uncertainty surrounding these arguments, it also illustrates two alternative scenarios for the stock of the accumulated savings (a “cut-back” scenario and a “build-up” scenario) and assesses their possible implications for the global economic outlook. JEL Classification: F32, F41