Germany's сonsumer climate fell sharply, reaching all-time low

According to the report from GfK Group, the coronavirus pandemic and the measures introduced to contain the virus hit consumer sentiment hard in April. Income expectations and propensity to buy are in freefall, while economic expectation suffered albeit moderate losses. As a result, GfK has forecast a historic low of -23.4 points for May 2020, 25.7 points lower than in April of this year (revised to 2.3 points).

Data were collected during the first two weeks of April. At this time, consumers were feeling the full impact of containment measures such as closures of schools and businesses, production shutdowns and restrictions on going out for the first time. The consumer climate is currently in freefall. A value of -23.4 points is unprecedented in the history of the consumer climate to date.

"Given that the economy is largely frozen, this unprecedented cliff dive is hardly surprising. Retailers, manufacturers and service providers must prepare for a tough recession in the immediate future," explains Rolf Bürkl, GfK Consumer Expert. "Since it now seems evident that the easing of the COVID-19 containment measures will be very slow in order to take a cautious approach, the consumer climate can expect to face tough times in the coming months too."

The decline in the consumer climate is also being worsened by a large jump in propensity to save in April. The subject of the ECB zero interest rate policy is fading into the background in light of the uncertainty caused by the coronavirus crisis. This uncertainty has caused propensity to save to increase by more than 51 points in April, which puts a significant strain on the consumer climate.