German consumer confidence set to worsen in July
The projected tumble in consumer confidence breaks a four-month streak of consecutive rises
GERMAN consumers feel more pessimistic as they head into July, weighed down by inflation and economic uncertainty, a key survey showed Wednesday (Jun 26).
The forward-looking survey, published by pollsters GfK and the Nuremberg Institute for Market Decisions (NIM), dipped by 0.8 point to minus 21.8 points, compared to a month earlier.
The drop surprised analysts surveyed by FactSet who had predicted a fifth consecutive rise in consumer confidence in the German economy.
“The slightly higher inflation rate in Germany in May is clearly causing more uncertainty among consumers again, which is also reflected in the increase in the willingness to save,” said NIM consumer expert Rolf Buerkl.
The survey of some 2,000 respondents found that people were more downbeat than a month ago about their income prospects and the economic outlook, and were less likely to splash out on large purchases.
The German coalition government’s recent bickering over the 2025 budget has contributed to consumers’ reluctance to open their wallets, Buerkl said.
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“The government must quickly and clearly communicate the burdens and reliefs people will face as a result of the upcoming budget discussions,” he said, adding that consumers need “planning security”.
The darker mood was echoed by the closely-watched Ifo business confidence index on Monday, which also fell unexpectedly.
The German economy contracted slightly in 2023 but a modest recovery is expected this year, with the government forecasting 0.3 per cent growth.
Germany’s economic rebound will still be sluggish compared to the wider 20-nation eurozone, which the European Union predicts will expand by 0.8 per cent in 2024. AFP
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