German consumer confidence is expected to remain stable at a 7-year high in April, but the developments in Crimea could weigh on the consumer mood in coming weeks, results of a closely watched survey from the market research group GfK revealed Wednesday.
The forward-looking consumer confidence index held steady at 8.5, in line with forecast. The score matched March's reading, which was the highest since January 2007.
The survey, based on 2,000 consumers, was conducted ahead of the escalation of the crisis involving a referendum and Russia's subsequent annexation of Ukraine's autonomous region of Crimea.
If the Crimean crisis were to spread to other parts of Ukraine, a negative effect on the German consumer mood would be very likely, GfK observed. "It cannot be ruled out that this event will unsettle consumers in the coming weeks," the firm said.
The Ifo business confidence survey yesterday showed that firms were worried about the impact of the European Union's economic sanctions against Russia in the wake of the Crimean crisis. The sentiment index fell to 110.7 in March from 111.3 in February.
The economic expectations of consumers in March was back on the road toward recovery. The indicator gained 1.3 points to 33.2 points, the GfK said.
According to GfK, favorable global growth outlook with improved export prospects as well as low interest rates will stimulate the propensity to invest.
Meanwhile, income expectations dropped three points to 45.6 points in March. Nonetheless, expectations remain at a very high level as the stable labor market is nourishing hopes of more increase in collective income.
Following a small decline in the previous month, the third component of consumer confidence, the willingness to buy, registered a clear gain of 6.6 points to hit 55.5 points in March. The indicator suggests that the upward trend that first started in early 2013 has been sustained.
The stable labor market, good income development and a moderate rate of inflation continue to support the willingness to buy.
The GfK reiterated that private consumption will once again be a reliable pillar of the economy this year.
The European Commission has raised its economic growth forecast for Germany this year to 1.8 percent from 1.7 percent and the projection for 2015 was lifted to 2 percent from 1.9 percent.
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September 11, 2026 16:26 ET Consumer prices data was the main news on the economic front in the U.S. this week. In Europe, the latest interest rate decision from the European Central Bank was the focus along with the revised second quarter economic growth data for the euro area. In Asia, the monthly foreign trade data from China drew attention.