Brandenburg Gate in Berlin, Germany

Germany Consumer Confidence May 2020

Germany: Consumer confidence expected to fall to an all-time low in May

The coronavirus pandemic and government containment measures to curb the spread of the virus have dealt a significant blow to consumer confidence: The forward-looking GfK Consumer Climate index expects sentiment to fall to minus 23.4 in May, swinging from April’s revised 2.3 reading (previously reported: 2.7).

Backward-looking data for April—which is released at the same time as the forward-looking May estimate—revealed that views on economic expectations deteriorated further in the month as consumers expect a deep recession due to the pandemic.

Fears over job losses increased in April despite the government’s short-time work scheme to avoid layoffs—the same scheme was used during the financial crisis and avoided mass terminations seen elsewhere. Meanwhile, income expectations recorded the steepest drop in the survey’s history as sectors of the economy have been locked down, hitting self-employed workers particularly hard. As such, Germans’ propensity to buy dropped markedly; a decreased sense of job security, income losses and inability to purchase goods due to store closures all played a role in this. Furthermore, propensity to save skyrocketed in light of the above.

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