Germany’s consumer sentiment shows mixed picture in March 2023: Study


  • German consumer sentiment shows a mixed picture in March 2023, as per a recent study by GfK.
  • Income expectations continued to recover, but the propensity to buy remained stagnant.
  • Consumer expectations continued to improve for six consecutive months, but economic expectations suffered a small setback, and a technical recession has become more likely.

In March 2023, consumer sentiment in Germany showed mixed results, according to a recent study by market intelligence company Growth from Knowledge (GfK). While income expectations continued to recover, the propensity to buy remained stagnant, and economic expectations suffered a small setback.

The study revealed that consumer sentiment has continued to improve for six consecutive months, with the momentum slowing down compared to previous months. The renewed rise in consumer sentiment was primarily attributed to the positive development of income outlook, which rose by three points to minus 24.3 in March, the best value in ten months.

However, the propensity to buy was unable to benefit from the improved income expectations, remaining virtually unchanged at minus 17 points. The indicator is also 15 points lower than the previous year’s value, indicating continued uncertainty among consumers, as per the GfK Consumer Sentiment Study.

On the other hand, economic expectations suffered moderate losses in March after four consecutive increases. The indicator dropped by 2.3 points to 3.7 points, remaining above its long-term average of zero points. Despite the setback, the figure is up by 12.6 points compared to the same period last year.

The study also revealed that a technical recession, which means two consecutive quarters with a decline in gross domestic product (GDP), has become more likely in Germany. The GDP was already in negative territory at minus 0.4 per cent in the last quarter of 2022, and a slight decline is also possible in the first quarter of 2023. However, experts currently expect the German economy to recover somewhat in the second half of the year.

The GfK is forecasting minus 29.5 points in consumer sentiment for April, up 1.1 points from March of this year (revised minus 30.6 points).

“Income expectations are currently benefiting from the recent noticeable drop in energy prices, especially for gas and heating oil. Nevertheless, inflation will remain high this year, even if it will be somewhat lower than the 6.9 per cent measured in 2022 according to the forecasts available so far,” said GfK consumer expert Rolf Burkl. “The expected loss of purchasing power is preventing a sustained recovery in domestic demand. Accordingly, private consumption is unlikely to make a positive contribution to economic growth in Germany this year. This is also signalled by the still very low level of consumer sentiment.”