The indicator is expected at 2.7 points, its lowest value since the great financial crisis of 2009. The drop is 5.6 points compared to March.
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German consumer sentiment is expected to plummet in April after falling for the first time in March, reflecting the worsening of the new coronavirus pandemic and associated restrictions, according to the GfK barometer released on Thursday.
The indicator is expected at 2.7 points, its lowest value since the great financial crisis of 2009. The drop is 5.6 points compared to March, which has been revised down 1.5 points, to 8.3 points.
The institute therefore withdrew its forecast of 1% growth in consumption expenditure for the year. On the contrary, “retailers, manufacturers and service providers must prepare for a recession,” says Rolf Bürkl, consumer expert at GfK, without being more specific.
Consumer expectations about the development of the economy have fallen by 20 points, causing them to fall largely into negative territory, at -19.2 points. Such a level had not been seen since the summer of 2012, in the middle of the debt crisis.
The GfK explains this decline by an economy operating a “complete braking” in a very short time, like factories stopped and shops or restaurants closed.
Even more representative of the great fear that grips the first European economy, the IFO index of the morale of German entrepreneurs recorded in March its heaviest drop since 1991, to 86.1 points, according to a data published on Wednesday and slightly revised to the down a previous estimate.
Also, the GfK considers that the announced use of short-time working by employers and the fear of losing their job weigh on consumer morale.
The component of the indicator that measures their income expectations has thus fallen to its lowest level in seven years at 27.8 points.
Fearing to find themselves confined for a long time at home, the Germans multiplied the precautionary purchases or “Hamsterkäufe” in February, by rushing on pasta, flour or toilet paper. However, these purchases mask the marked decline in the overall propensity to consume in the coming months, also noted by the institute.
The GfK investigation was carried out during the first half of March, before many business closure decisions were known, but also before the unprecedented plan adopted by Berlin to combat the economic damage of the epidemic.
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