"In this case, there is a danger that private consumption would no longer fulfill its role as a key pillar of the German economy."
- GfK
Consumer confidence level in Germany, the largest economy of the Eurozone, dropped for the second consecutive month in a row in October, as geopolitical crisis in Eastern Ukraine and sanctions from Russia are weighing on both consumer and business sentiment. The benchmark index for the upcoming month, calculated by the GfK research group, declined to 8.3 points from 8.6 points this month. The indicator is considered as important among economists, as it is based on survey of 2,000 consumers in Germany, when they are asked to give their assessment of economic conditions, overall economic situation and their personal financial situation. Among these sub-sectors, estimates on economy plunged further, down to 4.4 points from 10.4 points in August and 35.5 back in July.
At the same time, economists suggest that economy of Germany still remains in a very good condition, as some external weakness and geopolitical tensions are overlapped by record-low unemployment, rising wages and low borrowing costs. Some country's employers, however, announced job cuts, after Russian counter-sanctions followed in August. Their business, however, has direct links with Russian market. Therefore, analysts do not expect the local economy to rebound considerably in the third quarter after the unexpected 0.2% decline in April-June.
© Dukascopy Bank SA