German stimulus measures lift consumer sentiment


A survey showed today, Thursday, that German consumer sentiment improved more than expected with the approaching August, with the support of a temporary value-added tax reduction as part of a government stimulus package to help the economy recover from the shock of the Corona virus.

The consumer sentiment index, published by the GFK Institute and based on a survey of about two thousand Germans, rose to -0.3 as August approached an average level of -9.4 in the previous month.

The rise is the third consecutive monthly and exceeds Reuters expectations by -5.0.

The German incentive package included reducing the value-added tax for ordinary goods to 16% from 19% and for food and some other goods to 5% from 7% from July 1 to December 31. The cut will cost the federal government up to 20 billion euros (23.17 billion dollars).

GFK said consumers’ tendency to buy and their expectations for their personal income improved for the third consecutive month. The optimism of consumers has also increased over the development of the economy as a whole.

A reading above zero indicates an annual growth in private consumption. A value below zero indicates a decrease compared to the same period a year ago.


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