In a further sign of the German economy’s strengthening, consumer sentiment as measured by the German Retail Association’s Consumer Barometer reached 97.5 points, or higher than at any point since the end of 2021.
The German Retail Association (HDE) released its May 2024 consumer sentiment figures, called the Consumer Barometer. Confidence has risen for the fourth month in a row, and is now higher than at any time since the end of 2021. The rise fits with falling inflation rates in Germany; consumer inflation now stands at 2.2%. The consumer index reached 97.5 points, up from April’s 96.1 points.
The sentiment could presage an increase in consumer spending, which has lagged other rising indicators of the health of Germany’s economy. HDE points out that the purpose of the barometer is to point to how consumers are likely to react in the next few months more than whether they are buying at the moment.
Other indicators
Germany’s GDP rose by 0.2 percent in Q1 2024 compared to Q4 2023, according to the Federal Statistical Office on April 30. Also, despite a deeper drop than preliminarily reported for the end of 2023, economists are seeing a brighter picture for the German economy for 2024. The federal government nudged up its growth forecast to 0.3 percent for 2024 from 0.2 percent.
Further indications of an improving economy come from the Leibniz Centre for European Economic Research(ZEW), which published a third consecutive rise in its business climate index, up to 89.4 points in April As the chart below shows, economic expectations continue to rise. The gain to 42.9 points, or 11.2 points more than in the previous month, continues the trend from a low in September 2023.
The other side
As Frankfurter Allgemeine Zeitung reports, not everyone agrees with the rising sentiment. The International Monetary Fund revised its own economic forecast for Germany in April. The fund sees growth in Germany over the course of 2024, but lowered its growth forecast for the year from 0.5 percent to 0.2 percent.
Even sentiment is not the same across the board. FAZ points out the German Economic Institute (IW) survey in April 14 percent more companies expected worsening conditions that expected improved conditions. This is a slightly more negative result than in autumn last year.
