German consumer sentiment weakens below expectations in March – GfK

The data from German GfK market research institute released on Wednesday, showed that German consumer sentiment fell to -24.7 points in March from -22.6 points previous month and disappointed forecast at -21.4 points.

Weaker than expected results signal that consumer sentiment is to further weaken in March, darkening outlook for households, in the situation of economic slowdown and turbulent political situation in Europe’s largest economy.

Economists expect the sentiment to remain weak but show cautious optimism for changes in politics after election victory of conservatives and their promises for implementing policies that would boost growth and move the economy into recovery mode, as it remains in contraction for the second consecutive year.

Quick formation of new government, despite anticipated obstacles in making a coalition, and approval of the budget for this year, is needed to send positive signals to consumers and boost consumer spending.

However, the latest data show no signs of optimism, as higher prices and uncertain economic and political situation pushed consumer income prospects to the lowest in over one year.

Also, consumers become much more cautious about spending, that resulted in further drop in households’ willingness to buy, driven by growing uncertainty over closures of businesses and job cuts.