Consumer Sentiment Remains Weak in Germany Amid Economic Concerns

The consumer sentiment in Germany continues to exhibit signs of weakness, according to the latest consumption climate study conducted by the Nürnberger Institute GfK and NIM. While expectations regarding economic development saw a slight improvement in February, both income expectations and the propensity to make purchases have declined, leading to an increased inclination to save among consumers.

Experts anticipate a further decrease in the consumption climate index by 2.1 points in March 2025, projecting a drop to minus 24.7 points. This index has been recorded monthly since 1980, and prior to the COVID-19 pandemic, it remained relatively stable around plus 10 points.

Rolf Bürkl, a consumption expert from NIM, indicated that the consumer climate has stagnated at a low level since mid-2024. A prevailing sense of uncertainty and a lack of planning security among consumers are major factors contributing to this trend.

The potential for a shift in consumer behavior hinges on the swift formation of a new government and the approval of a budget for the current year. Bürkl noted that establishing clear frameworks could encourage consumers to resume spending and invigorate the economy.

Despite a decrease in energy prices resulting in the lowest inflation rate since 2021, concerns over private consumption persist. Consumers are currently hesitant to commit to larger purchases, which is attributed to fears of corporate bankruptcies, impending factory closures, offshore production shifts, and workforce reductions within the German industrial sector. These factors have heightened employment anxieties, significantly dampening consumers' willingness to spend.

As the situation evolves, it remains to be seen whether the anticipated governmental changes will provide the necessary impetus for revitalizing the consumer market in Germany.