Fears for the future: Saving dynamics after the Covid-19 outbreak

The article entitled 'Fears for the future: Saving dynamics after the Covid-19 outbreak', written by researchers from the Bank of Italy, is now online.

The COVID-19 pandemic has induced a significant rise in households' saving worldwide, including in Italy. This note exploits information from the Bank of Italy's Special Survey of Italian Households to show that desired precautionary saving is associated to higher job uncertainty, perceptions of a more protracted health crisis and greater worries about the risk of a new pandemic occurring in the coming years. Despite the financial difficulties caused by the pandemic have mitigated the saving dynamics of many households, for many other households these precautionary motives have exerted an upward pressure on savings in 2020. Even with the epidemic progressively brought under control, a greater precautionary attitude, arguably reinforced by the 'scars' left by the COVID-19 crisis, could slow the decumulation of the savings piled up after the pandemic outbreak, attenuating the pressures from pent-up demand.