The COVID-19 outbreak has an enormous impact on consumer sentiment and consumer confidence in Germany, reports GfK. Economic and income expectations are expected to suffer heavy losses, as well as a propensity to buy. This leads to a much lower forecasted consumer sentiment level for April 2020. A figure of 2.7 points is expected, 5.6 points lower than march’s level (8.3 points).
The significant number of infections and restrictions due to the COVID-19 lockdown causes the consumer climate to collapse. It, right now, is at its lowest level since May 2009. “in light of current developments, we are withdrawing our consumer forecast of one per cent growth for 2020,” illustrates Rolf Bürkl, GfK Consumer Expert. “Retailers, manufacturers and service providers must prepare for a recession,” he adds. It depends on the economy to find its way back to normality how severe this recession will be. This fully depends on how long the protective measurements need to remain in place.
Hard times for retailers
Retailers experience dramatic sales losses. Almost as a whole, the market is facing tough times. Drug and grocery stores are exceptions. These see a jump in sales of 14% compared to the same month in 2019. For the large part, this growth is due to stock-piling purchase behaviour. The shutdown of normal life fuels this behaviour for the coming period.
In the medium and long term, even these retailers need to prepare for the financial uncertain times that come, says Dr. Robert Kecskes, GfK Retail Expert. “We must assume that there will be an increased sense and need for local communization and assistance after the outbreak. Lots of households might end up reliant on social welfare.”
Consumer expect a recession
German consumers expect a very tough period ahead. Expectations fell by 20.4 points in March, resulting in the consumer confidence slipping to -19.2. A result of the current measurements is that the German economy has come to an almost complete halt. Production sites have shut down and businesses and gastronomies are closed. Consumers fear a significantly reduced amount of working hours and an increase in unemployment figures.
Alongside that, consumers fear heavy losses in their incomes. The increasing uncertainty regarding employment situations feeds this growing pessimism. This also results in a smaller spending pattern, as consumers are less willing to buy.