Payments made with OP payment cards have in recent weeks risen to the highest level during the coronavirus pandemic. A fall in the coronavirus infection rate and the lifting of lockdown restrictions have sped up the recovery in consumer spending. Recovery in leisure time entertainment services is, however, in its infancy due to the restrictions.
In June, payments made with OP Financial Group’s debit and credit cards have risen to their highest level during the coronavirus pandemic.
Payments are already now almost 10% higher than in July a year ago when coronavirus cases were low. In OP Financial Group economists’ view, growth in card payments suggests that economic recovery is gathering momentum and taking a new direction.
“Economic recovery has so far been largely led by the manufacturing industry, but recovery in the service sector too now seems to speed up again. As such, this will increase GDP and further boost economic growth through improved employment. The recovery from the coronavirus crisis would seem to gather momentum during the summer,” says Tomi Kortela, OP Financial Group’s senior economist.
OP’s economists forecast a 3.3 per cent GDP growth for the current year. Vigorous growth in domestic consumption at the beginning of the summer would seem to support forecasts suggesting a positive picture of the economy.
However, card payments have not recovered evenly. Consumer spending on services and goods has picked up strongly during the spring and early summer whereas the tourism and leisure time entertainment services sectors, which are hard hit by the restrictions, have still seen a slight recovery. When card payments on the whole have clearly exceeded the pre-crisis level, payments in leisure time entertainment services are still around 40 per cent lower than before the crisis
The lifting of lockdown restrictions can, however, be seen clearly in card payments of customers in restaurants – as a result of the lifting of the restrictions, payments have increased quickly. Since the beginning of May, card payments in restaurants have more than doubled.
Despite growth in consumer spending, savings are still accruing
Households accrued 6 billion euros more in savings last year than in 2019. According to OP Financial Group’s card data, consumer spending should, however, rise quite moderately and households are expected to accrue their savings during the summer as well. The accrued savings will hardly be spent altogether during this summer but will largely be channelled to the stock market, homes and holiday homes.
“In sectors like tourism, we can see a transient boom in consumer spending when the restrictions are lifted. An extensive spending boom, where the household savings rate would turn negative to a significant extent, seems, however, improbable”, states senior economist Korpela.
Source: OP Financial Group