BERLIN (dpa-AFX) - German consumer sentiment is set to weaken in September for the first time since early 2013 as intensified geopolitical tensions are likely to shift the economy into lower gears.
The forward-looking consumer confidence index fell to 8.6 from a revised score of 8.9 in August, a survey by the market research group GfK, based on responses from 2,000 households, showed Wednesday.
The index was expected to drop marginally to 8.9 from August's initially estimated value of 9.
Both income expectations and willingness to buy dropped slightly in August, while economic expectations completely collapsed in light of the intensified state of international affairs, the GfK said.
The escalation of the situation in Iraq, Israel and eastern Ukraine as well as the gradually accelerating spiral of sanction in Russia had a negative impact on the previously extremely optimistic economic outlook of Germans, the GfK said.
The economic expectations index plunged 35.5 points to 10.4 points in August. This was the sharpest fall since the survey began in 1980. Given that no long-term solutions to the crises appear, uncertainty is rising over the potential consequences for the German economy.
Primarily due to the collapse in the economic outlook, income expectations failed to maintain the record level. The income expectations index slid 4.6 points to 50.1 in August. It still remained at an extremely high level.
The continued stability of domestic framework such as the steady employment situation, good income development and low inflation are ensuring that the severely deteriorated economic optimism is only having a limited impact on the income outlook.
Further, the collapsing economic mood has not had much of an impact on the propensity to consume, the research group said. The indicator measuring willingness to buy dropped 1.7 points to 49.3 in August.
Consumers seem to be basing their judgment on stable employment conditions as well as the low rates of inflation and interest, rather than the ever more unstable international environment.
GfK reaffirmed its growth estimate for private consumption at 1.5 percent this year as major upheavals in the global economy have so far only affected the consumer mood in Germany to a very limited extent. The agency stressed that it is important that the situations in the crisis regions do not escalate further.
Bundesbank last week said sanctions against Russia, and counter actions taken by it, would affect German exports. Crisis in Ukraine as well as the conflict in the Middle East has weakened Germany's growth prospects so far this year.
Official data earlier this month showed that the largest Eurozone economy contracted 0.2 percent in the second quarter on weaker exports and investment.
Copyright RTT News/dpa-AFX