THE FINANCIAL assets of Slovak households have been increasing in spite of the impacts of the economic crisis. In response to the worsening economic situation, Slovak households tightened their belts last year and started saving more and in the end accumulated more in savings than they had in 2008. So says an analysis prepared by UniCredit Bank, as cited by the SITA newswire.
Ján Tóth, senior economist at UniCredit Bank Slovakia, attributes it to the fact that Slovaks in general do not like to live in debt. “At the moment, households in Slovakia are more cautious in spending and thus they are accumulating savings, even in spite of growing unemployment,” said Tóth.
The financial wealth of Slovak households reached 59 percent of GDP in 2009. This was the smallest proportion among the Visegrad 4 countries (the Czech Republic, Hungary, Poland and Slovakia), but analysts say that it is also important to take into consideration the value of non-financial wealth, represented primarily by real estate ownership, and that Slovaks have considerably more wealth accumulated in these kinds of assets. Based on data from 2001, Slovaks had a higher proportion of home ownership, by as much as 16 percent, compared with some citizens of western Europe and 40 percent more than in the Czech Republic. The ownership share of housing in Slovakia reached 66 percent in 2001 while the average in western Europe was 57 percent.
Tóth believes that along with the growing standard of living in Slovakia, net financial assets will grow as well.
“We do not expect any dramatic changes in behaviour of households,” he said. “This is not the kind of thing that changes within half a year.”
Analysts further pointed out that in comparison with many other countries Slovaks have lower debt levels even though they have less in financial assets. Financial obligations of Slovak households reached only 22 percent of GDP last year while the average in western Europe was 59 percent.
“Slovaks still use few [other] financial products and keep too large of a portion of their financial wealth in cash and in bank deposits,” said Tóth, adding that Slovaks also keep usingvmore expensive consumer loans and take fewer housing loans.
“Share funds are rarely utilised,” he added.
