Propensity to save in Germany hits 16-year high

The Germany-based market research company GfK and the Nuremberg Institute for Market Decisions have released the Consumer Confidence Index results for the coming month.

Accordingly, the Consumer Confidence Index, which was revised to minus 29.6 for this month in January, rose by 0.6 points to minus 29 in March. Thus, the index saw a slight increase in March following a significant 4.2-point decline in February.

The GfK report emphasized that Germans are still considering saving given the general economic situation, and that despite a sharp increase in income expectations, the recovery in the consumer climate remains quite moderate.

Nuremberg Institute for Market Decisions expert Rolf Buerkl stated in his assessment, "Consumers are very unsettled. In addition to the ongoing rise in prices, weaker economic forecasts for the German economy this year may also be a significant reason for this."

"MUST WAIT FOR RECOVERY"

Stating that the outlook for the German economy has become increasingly pessimistic recently, Buerkl assessed, "The German Federal Government has also lowered its growth forecast for 2024 from 1.3 percent to 0.2 percent. For now, Germany must continue to wait for an economic recovery."

While the barometer for consumers' income expectations in Germany climbed to its highest level since February 2022, before the start of the Ukraine-Russia War, the propensity to save reached its highest level since June 2008 at 21.4 points. The fact that consumer confidence is in negative territory indicates a year-on-year decline in private consumption.

On the other hand, the German economy shrank by 0.3 percent last year, despite the slowdown in investments and the construction sector losing momentum.