Berlin - Global tensions resulted in economic expectations in Germany plunging at their fastest pace for more than three decades in August, leading to consumer confidence dropping for the first time since the start of the year, a survey released on Wednesday showed.
Consumer confidence in Europe's biggest economy will fall to a lower-than-forecast 8.6 points in September from a downwardly revised August reading of 8.9 points, the Nuremberg-based GfK research group said, releasing its forward-looking indicator.
Analysts surveyed by dpa-AFX had expected the GfK indicator would slip from an originally forecast 9 points for August to a reading of 8.9 in September.
“The escalation of the situation in Iraq, Israel and eastern Ukraine as well as the gradually accelerating spiral of sanctions in Russia has now also had a negative impact on the previously extremely optimistic economic outlook of Germans,” the GfK said.
“Uncertainty with regard to the continued economic developments in Germany has increased quite considerably,” it said.
German business confidence also fell in August, slumping to its lowest level in 13 months on concerns about the economic impact of the crises in Ukraine and the Middle East, a survey released on Monday showed.
The Munich-based Ifo economic institute said its closely watched indicator of the mood in boardrooms in Germany dropped more than forecast to 106.3 from 108 in July.
Analysts had expected a decline to 107.
Based on a survey of about 2,000 households, the September reading for consumer confidence represents the indicator's first decline since January 2013.
“Nonetheless, the indicator continues to be at a rather high level,” the GfK said, confirming its forecast for a rise in private consumption this year of 1.5 per cent.
But worries about global tensions resulted in the survey gauge measuring economic expectations plummeting by 35.5 points to 10.4 - its biggest fall since 1980.
The German economy shrank by a more-than-forecast 0.2 per cent in the three months to the end of June compared with the first quarter, data released this month showed.
The sharp fall in how consumers see Germany's economic outlook also led to a moderate drop in income expectations.
The GfK said households' willingness to buy remained “highly robust” despite also posting a drop.
The GFK survey components which measure economic and income expectations, as well as willingness to buy, are for August. - Sapa-dpa