ZURICH (MaceNews) – German consumers appear more optimistic as economic stimulus and the opening of the economy are boosting expectations, Germany’s Gfk Institute reported Thursday.
GfK projects that its measure of consumer confidence will be -9.6 in July, an improvement from a revised -18.6 (-18.9) in June, rising for a second consecutive month. However, GfK cautioned the July forecast is still the third-lowest reading on record.
“The faint light at the end of the tunnel, which was already apparent last month, is apparently getting somewhat brighter,” explains Rolf Buerkl, GfK consumer expert.
“The extensive support provided by the economic stimulus packages, such as the announcement of a temporary reduction in value-added tax (VAT), is certainly a contributing factor. Provided that retailers and manufacturers also pass these reductions on to consumers, it can be assumed that one or two planned purchases will instead be made in the second half of 2020, thereby supporting consumption this year,” he continued.
The forecast for July was based on improvements in the June components of the index which saw economic expectations increase to 8.5 from -10.4 in May. At the same time, income expectations rose as did the propensity to buy.
Despite the improvement, GfK noted that Germany’s reliance on exports makes a recovery dependent on its most important trading partners and subsequent economic improvement.
Thursday’s data add to the picture in Germany that the worst could be over. Both the ZEW and IFO reports showed that business confidence is also picking up.
GfK will publish its next report July 23.