German Gfk consume climate for July (in June) was unchanged at 10.7, slightly above expectation of 10.6.
Among the components, there is notable 14.1pts drop in economic expectations from 37.4 to 23.3. GFK blamed US trade policy as the driver of the decline. It said in the statement that “the American President’s protectionist trade policy, which affects both Germany and other export-oriented countries such as China, casts further gloom over the economic forecast.” As a result, “economic experts are currently predicting that the economic dynamics of the global economy will decline.”
As an export nation, Germany is affected “naturally”. Gfk pointed to the study of German Institute for Economic Research (DIW) and the ifo Institute, which projected the German economy will “drop down a gear” this year. These two institutes lowered GDP forecasts by around half a percent to 1.9% and 1.8% respectively.
Nonetheless, income expectations improved from 54.2 to 57.6. Propensity to buy also rose from 55.9 to 56.3. The improvements offset deterioration in economic expectations.
