- Title: COVID-19 threatens to knock away Germany's last pillar of growth
- Date: 25th November 2021
- Summary: BRUZGI, BELARUS (NOVEMBER 25, 2021) (REUTERS) VARIOUS OF MIGRANT MEN, WOMEN AND CHILDREN GATHERED BY FENCE TWO YOUNG GIRLS STANDING BY FENCE YOUNG BOY WEARING MASK MIGRANTS GATHERED VARIOUS OF MIGRANTS QUEUING AT FOOD TRUCK MAN GIVING OUT FOOD MIGRANT FILLING UP WATER BOTTLE FROM TAP MIGRANTS WASHING THEIR HANDS AND FACES MAN HEATING UP COOKING POT WOMEN WASHING CLOTHES MI
- Embargoed: 9th December 2021 09:38
- Keywords: COVID-19 Christmas market closures GFK German economy consumer sentiment shoppers
- Location: VARIOUS, GERMANY
- City: VARIOUS, GERMANY
- Country: Germany
- Topics: Europe,Economic Events
- Reuters ID: LVA008F53I8WD
- Aspect Ratio: 16:9
- Story Text: A surge in coronavirus infections in Germany is weighing on consumer morale in Europe's largest economy, dampening business prospects in the Christmas shopping season and threatening to kick away its last remaining pillar of growth.
The GfK institute said on Thursday (November 25) its consumer sentiment index, based on a survey of around 2,000 Germans, fell to -1.6 points heading into December, from a revised 1.0 points a month earlier.
The December reading was the lowest since June and compared with a Reuters forecast for a smaller drop to -0.5.
The survey was followed by detailed gross domestic product data which showed household spending was the sole driver of a weaker-than-expected economic expansion in the third quarter, more than offsetting a drop in company investments and state consumption over the summer.
Gross domestic product in Europe's largest economy grew by 1.7% quarter-on-quarter in adjusted terms from July to September, the Federal Statistics Office said. That fell short of a flash estimate of 1.8% published last month.
The data marked a slowdown in German growth from an upwardly revised expansion of 2% from April to June.
The economy shrank by 1.9% on the quarter in the first three months of the year.
A jump in new coronavirus infections over the past weeks is now threatening to kick away Germany's last remaining pillar of growth in the final quarter.
"The consumer climate is currently being pinched from two sides. On the one hand we are experiencing the fourth wave with strongly rising incidence rates, with problems in the health sector and increasing restrictions that are just coming into force. On the other hand we are experiencing price hikes and rising inflation which are currently above 4%. And these two things together are really pinching the consumer sector at the moment," GfK economist Rolf Buerkl said.
Inflation rates of more than 4% were also hurting the purchasing power of consumers, he said.
"Together, this is all dampening the business prospects for the upcoming Christmas shopping season," Buerkl said.
Consumers' expectations for their personal income and the development of the economy both deteriorated.
This pushed down the propensity to buy to a nine-month low.
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