Consumer confidence in Germany falls by 2.1 points

The results of the Consumer Confidence Index for the next month, prepared by the German-based market research company GfK and the Nuremberg Institute for Market Decisions (NIM), have been announced.

Accordingly, the Consumer Confidence Index, which was measured as minus 22.6 for this month in January, decreased by 2.1 points to minus 24.7 for March.

The expectation was for the index to rise slightly to minus 21.4.

German consumers' income expectations fell to their lowest level since January 2024 in February due to rising prices, uncertain political and economic situations and dissatisfaction with politics, according to GfK.

"Reports that factories will be closed, production will be moved abroad and layoffs will occur in German industry, especially among car manufacturers and their suppliers, are causing increasing concerns about job security among consumers," GfK said in a statement.

"THE FIGURES DO NOT SIGN GOOD FOR CONSUMER CONFIDENCE"

NIM Consumer Researcher Rolf Buerkl, commenting on the data, said that the current figures do not indicate a recovery trend in consumer confidence in Germany, adding: "The consumer climate has been stagnating at a low level since the middle of last year. There is still great uncertainty and lack of confidence in the future among consumers."

Buerkl stressed that the government should be formed quickly and this year's budget should be approved quickly in order to reassure households in Germany. "These will provide both companies and households with more certainty in planning. This will create important conditions for consumers to be more willing to spend money and for consumption to revive," he said.

SIGN OF INCREASING UNEMPLOYMENT

Hamburg Trade Bank Chief Economist Cyrus de la Rubia also noted that the decline in consumer confidence in Germany was "a sign of consumer discouragement in spending and rising unemployment."

Rubia noted that this situation is not good news for either the retail sector or the general economy, adding: “It is not only the weakness of exports that has become a problem for the German economy, but also domestic demand, which is essentially dependent on consumers. The new government must quickly make bold decisions that will restore people’s confidence.”

ELECTION RESULTS AND THE GERMAN ECONOMY

On the other hand, according to the provisional official results announced by the German Electoral Council, the Christian Union (CDU/CSU) parties won the early general election held yesterday with 28.6 percent.

Following the election, a new coalition government is expected to be formed under the leadership of the Christian Union (CDU/CSU) parties.

In the picture that emerged after the early general elections in Germany, the far-right Alternative for Germany (AfD) party was notable for coming first with the highest rate of votes in the five eastern states.

Meanwhile, the German economy is set to shrink by 0.2 percent year-on-year in 2024 as a whole, marking the second consecutive year of contraction as structural problems and increasing competition with China weigh on the economy. The economy shrank by 0.3 percent in 2023.

In its report on the economy published on February 24, the German Central Bank (Bundesbank) pointed out that the coalition government to be established in the country will take office in a difficult economic environment and made the assessment that "In terms of the basic trend, the German economy remains stuck in stagnation."