HOUSEHOLDS’ CONSUMPTION PATTERN AND SAVING – EVIDENCE FOR THE FIRST YEAR OF THE COVID-19 PANDEMIC IN BULGARIA2

ABSTRACT

Households’ saving jumped up in 2020 as a response to the outburst of the Covid-19 pandemic. The objective of the paper is to analyse the mechanism behind the hike in households’ saving through the changes in their consumption pattern. The analysis makes use of the households’ budget survey annual data for the period 2008-2020 for Bulgaria. Households’ downward adjustment in spending in 2020 followed the pattern of 2009-2010, but the reduction was more pronounced in expenditures on recreation, culture, and education (related both to the Covid-19 restrictive government measures and self-restrain from consumption caused by enhanced health risk) and spending on health (self-restraint). A supposition may be drawn that the enhanced health risk perception and self-restraint might contribute to a relatively elevated saving rate. Subdued consumption of services, most affected by Covid-19 restrictive measures, might sustain at least in the near future and slow down the overall growth rate. Policy measures to boost consumption, particularly of services, may be ineffective. © 2022, Bulgarska Akademiya na Naukite. All rights reserved.