Total net effect on consumption negative
To establish the overall net effect, we also have to look at the actual change in other potentially influenced consumption categories.
On the positive side, there will be more consumption of energy and water, for instance, due to more working from home, but the effect will be small: even if homeworkers double the average number of days worked at home from one to two days, total consumption would rise by less than 0.1%. Increasing spending on internet connectivity will also be limited as many people already have a sufficient connection. For electronics, the effect is largely determined by a somewhat higher replacement rate because most people already have laptops and screens if required. Altogether, we expect the increase in spending on electronics, communication and energy & water to be limited in practice.
On the negative side, the decrease in commuting, business and shopping-related travel could reduce vehicle operation and maintenance consumption and transport services and vehicles by a significant amount. As these activities represent a bigger share of total consumption than electronics, communication, energy, and water, we expect an additional negative effect.
Using minimum and maximum assumptions on the change in spending on the relevant parts of electronics, communication, energy & water, transport and vehicle operation, we think this effect is small.
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September 03, 2021 at 08:05PM
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The long-term effect of Covid-19 on European consumption differs in each country - ING Think
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