Propensity to save remains high, potentially reducing consumption appetite

Market sentiment indicators for February continue to flow in. Before we analyze the PMI indices for the region, let's dive into consumers' behavior. We have already reported that consumer confidence has been declining since mid-2024. Today, we zoom in on the saving plans of households. Within the ESI surveys, the balance of answers for planned savings over the next 12 months is being collected. In the EU, the propensity to save seems to have continuously increased and is at the highest level since 2015. In the region, we have seen a similar trend from mid-2022 until mid-2024. The average for CEE8 reached its peak in May 2024, and since then, we have seen some divergence compared to the whole EU as the balance of answers has been dropping in the region over the last half a year. It remains at relatively high levels overall. In 2024, consumption was a key driver of growth as the purchasing power of households improved substantially. Yet, in many CEE countries, it has not been as strong as wage growth would imply. The increased tendency to save (rebuilding financial buffer, increased global uncertainty) is one of the reasons behind such behavior.