October 20, 2022

  • Falling stock market prices and rising interest rates caused a sharp drop in the value of financial assets in the second quarter of 2022.
  • Private sector debt fell to 62.1% of GDP at the end of 2021.

In the second quarter of 2022, the net financial wealth of individuals fell by €53.3 billion to €1145.1 billion as of 30 June 2022. This is the sharpest decline since the start of the COVID-19 crisis in the first quarter of 2020.

The drop is attributable to falling stock market prices and rising interest rates. This combination of factors resulted in write-downs in investment fund holdings (-€24.2 billion). The dip in equity markets in turn caused the value of listed shares to drop (-€12.7 billion), while a rising yield curve led to a fall in the value of insurance products (-€23.8 billion) in the second quarter of the year. This curve is an important factor in the valuation of technical provisions for life insurance and pension rights. Finally, rising interest rates also caused the value of debt securities to slump (-€0.7 billion).

Private investment rose by €11.5 billion in the second quarter of 2022, mainly as the result of an increase of investment fund holdings (+€5.5 billion). Sight deposits (+€4.5 billion) and other deposits (+€3.6 billion) also climbed, partially due to the introduction in April 2022 of a deposit limit on regulated savings accounts held with a major bank. As a result, regulated savings deposits remained more or less stable (+€0.1 billion). Sales of insurance products (-€2.7 billion) and debt securities (-€0.8 billion) by individuals were down somewhat in the second quarter of 2022. New financial liabilities of individuals rose by €5.4 billion to an outstanding amount of €332.5 billion as of 30 June 2022, mainly due to an increase in mortgage loans (+€3.7 billion) and short-term loans (+€0.9 billion).

Source: National Bank of Belgium
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