Germany: Consumer sentiment expected to drop to historic low in May
The GfK consumer climate index is forecast to drop to a record low of minus 26.5 in May from minus 15.7 in April on the back of the war in Ukraine and elevated inflation.
The expected deterioration in sentiment came on the back of backward-looking data for April, which is released simultaneously and underpins the May expectation. Economic forecasts nosedived as the war in Ukraine has increased the risk of the German economy entering a recession. Sanctions imposed on Russia in the wake of the invasion of Ukraine as well as disrupted supply chains offset the impact of the rollback of Covid-19 restrictions and a tight labor market. Moreover, income expectations deteriorated further in April. Falling economic and income expectations also dealt a blow to consumers’ propensity to buy.