Published on Monday, February 20, 2023

Spain | And then it was gone

Household net financial wealth fell in real terms in 2022. The nest egg built up during the pandemic diminished dramatically during the year, potentially capping growth in domestic demand going forward.

Key points

  • Key points:
  • In the first nine months of 2022, household net financial wealth was down 9% from the same period of 2021, when it was near all-time highs.
  • Increased consumption during lockdown explains part of the decline in wealth. In December, Spain's National Institute of Statistics revised up its figure for expenditure by households resident in Spain by roughly EUR 20 billion.
  • At the same time, households in Spain opted to turn part of their liquidity into real estate wealth -which takes longer to be converted into consumption- given the larger returns offered by this sector.
  • Inflation was the main culprit behind the drop in household wealth in real terms. Prices rose 8.5% year-on-year on average, considerably undermining the purchasing power of Spaniard's savings.
  • This could explain why what at one time was viewed as an unexpected excess of resources is now considered insufficient to meet the requirements for supplementing labor income, dealing with emergencies or even ensuring a decent retirement.

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