Consumer sentiment in Germany is expected to deteriorate further in March, contrary to expectations of a slight improvement, as households remain wary of the economic and political situation in Europe's largest economy, a survey showed on Wednesday.
The consumer sentiment index published by the GfK Market Research Institute and the Nuremberg Institute for Market Decisions (NIM) fell to -24.7 points from a slightly revised -22.6 points in the previous month.
Analysts polled by Reuters had expected sentiment to rise slightly to -21.4 points.
DZ Bank analysts forecast that sentiment would remain gloomy but said pessimism could be tempered somewhat by the prospect of a change in politics after the election on February 23.
The conservative party led by Friedrich Merz won the election on Sunday with promises of pro-growth policies to stimulate the ailing economy, but only won 28.5% of the vote, paving the way for tough negotiations to form a stable government coalition.
NIM analyst Rolf Buerkl called for a swift government formation and swift approval of this year's budget to reassure households.
Consumer income prospects plunged to a 13-month low in February due to higher prices, political and economic uncertainty, and political discontent.
Household spending also fell to its lowest level since June, and many consumers will continue to spend cautiously amid reports of possible factory closures, production relocations and job cuts, the institute said.
Europe's largest economy is set to contract for a second straight year in 2024, cementing Germany's position as a laggard among its eurozone peers, and it also shrank in the final quarter of last year, showing little sign of an immediate recovery.
