Consumer confidence in Germany grows for second month
2022.12.21 05:17
Consumer confidence in Germany grows for second month
Budrigannews.com – According to a statement released on Wednesday by market research firm GfK, although German consumer confidence increased for the third month in a row, the recovery is still constrained by the energy markets.
Although the company’s index increased from a downwardly revised 40.1 in December to -37.8 in January, it remains close to all-time lows as households in Europe’s largest economy face a winter with sky-high energy bills and rising interest rates.
GfK analyst Rolf Buerkl stated, “The light at the end of the tunnel is getting somewhat brighter,” pointing to the government’s plans to cap energy prices, albeit at levels significantly higher than what Germans have paid in recent years. Last month, Berlin approved borrowings totaling up to €200 billion (one euro equals $1.0633) to cover the costs incurred by businesses and households as a result of the energy crisis.
As the government’s measures, which will initially run for a year, removed some of the uncertainty surrounding the outlook, other surveys have also turned higher in the last few months, including the Ifo and S&P Global.
Nevertheless, Buerkl cautioned that the recovery remained uncertain.
“The light at the end of the tunnel would get dimmer again very quickly, or even be completely extinguished,” for instance, “if, for example, the geopolitical situation should worsen again and lead to a significant rise in energy prices.”
Personal spending tendencies and expectations for the economy both improved in the GfK index. All things being equal, GfK noticed that buyers actually anticipate that the economy should fall into downturn – but not as profound a downturn as recently dreaded.
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Pantheon Macroeconomics analyst Claus Vistesen wrote to clients, “This is all good news, but the overall message from the GfK survey remains one of difficult conditions for households.” We are likewise wary that the improvement will go on in the principal quarter, yet a ton will really rely on how cold it gets, and the related draw on gas stocks, which is impossible to say as of now.”
