The global economy could grow half a percentage point faster next year if households spend some of the huge savings they built up during the coronavirus pandemic, a French economic think-tank said on Wednesday.
With businesses such as restaurants, cinemas and hotels still closed in many countries, many households in developed countries have accumulated far greater savings than normal.
Whether households start spending these savings or sit on them in anticipation of financial challenges ahead is one of the biggest puzzles facing economists and policymakers as they try to figure out how fast economies will recover from the pandemic.
The OFCE think-tank approached the issue by comparing a scenario for major economies where households spend in 2022 a fifth of the extra savings they built up during 2020 and 2021 with a scenario in which they do not.
Under the first scenario, global economic growth was seen at 4.5% next year and under the second it came out at 4.0%, the OFCE said in an update of its global forecasts.
The U.S. economy was seen achieving growth next year of 5.9% under the first scenario and of 3.7% without the boost from savings being spent down.
Germany, Europe’s biggest economy, could see 5.5% growth next year under the first scenario and 4.1% under the second, while French growth would reach 6.0% and 4.3% respectively.
Britain could see growth of 5.0% with a savings drawdown or 3.2% without while Italy was seen at 5.5% and 3.9% respectively.