This marks our 500th Daily Sketch and we are delighted to have you as a reader. Two years have passed since we first wrote a Daily Sketch in May 2021. The first one, titled “Time to spend”, was about how excess savings in Europe and the US could fuel consumer spending growth.
Fast forward two years and many companies and investors are eagerly awaiting the recovery in spending by Chinese consumers after severe mobility restriction were lifted. However, Chinese consumers have much fewer excess savings and only 6% of household disposable income vs. 13% and 15% in Europe and the US. That being said, the average savings rate in China is around 30% vs. 5-10% in Europe and the US.
One industry that expects demand to return is the airline industry, with the number of available airlines seats on flights from China increasing. Within China, available seats have risen to 120% of 2019 levels already. But the recovery of destinations outside of China has been more pedestrian, with available seats only expected to reach 82% of 2019 levels in Europe by the 1st quarter of 2024.
Source: SRS, Bernstein, 2023.