global economy

German consumer confidence hit as virus cases mount

Agence France-Presse

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German consumer confidence hit as virus cases mount

A view of Roemerberg square in the historical city center of Frankfurt am Main, Germany, on August 26, 2020. (Photo by THOMAS KIENZLE / AFP)

AFP

Rising coronavirus cases 'are causing uncertainty and therefore depressing the mood' among consumers in Germany

The mood among German consumers has darkened significantly as a potential second wave of coronavirus cases threatens to stifle economic recovery, a closely-watched survey on showed Friday, August 28.

The GfK institute’s forward-looking barometer of consumer confidence heading into September fell for the first time in 4 months, hitting -1.8 against -0.2 in August.

The indicator plummeted to a historic low in May when virus lockdowns reached their peak but it had been improving as shops and factories reopened.

“Rising infection rates and the fear of a tightening of corona-related restrictions are causing uncertainty and therefore depressing the mood,” GfK’s Rolf Buerkl said.

“Whether this is only a temporary slowdown depends above all on how the rate of infections develops and the measures to be taken by politicians,” he added.

Germany has in recent days recorded its highest number of daily virus cases since April, with authorities suggesting large numbers of returning summer tourists may be bringing the virus with them.

Chancellor Angela Merkel’s government and leaders of Germany’s 16 states on Thursday, August 27, unveiled tougher measures to curb the spread, including extending a ban on large events until December 31. 

The GfK survey found that German shoppers were more pessimistic than before about their income expectations, against a backdrop of widespread short-time working and fears of job losses in pandemic-hit industries. 

The pollsters, however, recorded a slight increase in consumers’ expectations for economic growth.

The German government expects the economy to shrink 6.3% this year before returning to growth in 2021.

There is little evidence so far that a temporary reduction in value-added tax (sales tax) in Germany, which has been in force since July 1, has compensated for consumers’ mounting worries, GfK added. – Rappler.com

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