Economic expectations for Europe strongly influenced by Greek crisis. Results of GfK Consumer Climate Europe for the second quarter

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Press Release July 15, 2015 Rolf Bürkl Tel. +49 911 395-3056 rolf.buerkl@gfk.com Ursula Fleischmann Corporate Communications Tel. +49 911 395-2745 ursula.fleischmann@gfk.

1 Press Release July 15, 2015 Rolf Bürkl Tel Ursula Fleischmann Corporate Communications Tel Economic expectations for Europe strongly influenced by Greek crisis Results of GfK Consumer Climate Europe for the second quarter of 2015 Nuremberg, July 15, 2015 The lengthy negotiations between Greece and its creditors have clearly influenced the mood of consumers in most European countries in the second quarter of this year. Particularly in Eastern European countries, however, the crisis between Russia and the Ukraine is playing a major role as well. Nevertheless, the GfK Consumer Climate EU28 has increased by 1 point overall since March to 10.8 points. These are results for the GfK Consumer Climate for Europe from 15 European countries. The Greek crisis largely set the mood for European consumers in the second quarter of this year, and the economic expectations in many countries has stagnated or decreased as a result. At the time of the poll, which was carried out in the first two weeks of June, the negotiations between Greece and its creditors had increasingly come to a head. The provisional climax the tentative failure of the negotiations, the closure of Greek banks, the referendum and the new, seemingly successful negotiations is therefore not reflected in this survey. It is assumed that the mood of the people in Europe, primarily within the Monetary Union, may deteriorate even more significantly over the summer. This applies, in particular, to countries like Germany, Italy, France, and Spain, which either bear a high share of Greece s debts or are also struggling with a difficult economic situation. GfK SE Nordwestring Nuremberg Germany T Management Board: Matthias Hartmann (CEO) Christian Diedrich (CFO) Dr. Gerhard Hausruckinger Debra A. Pruent Chairman of the Supervisory Board: Dr. Arno Mahlert The development of the income expectations as well as the propensity to buy vary among the different countries. Country-specific influences in the second quarter were stronger here than the possible effects of Greece s exit from the European Monetary Union. Nevertheless, the GfK Consumer Climate EU28 has increased by 1 point overall since March to 10.8 for the second quarter. Germany: risk of a Grexit is lowering economic expectations The deteriorating situation in Greece has left German consumers feeling uncertain in June. They are worried about the negative effects on the German economy and thus on business activity. In June, the economic expectations fell to 24.9 points as a result. This is just under twelve points lower than in March. However, the indicator reached 38.3 points in May, which was the highest level since July of last year. Commercial register Nuremberg HRB

2 In contrast to this, the income expectations in Germany have remained unaffected by the Greek crisis. The indicator increased again by more than 4 points over the past three months and is currently at 57.1 points. This is the highest level since German reunification in The main reasons for the high level are the good employment situation, low unemployment, and the favorable wage agreements that are expected. The survey shows a similar attitude regrading the propensity to buy. Although the indicator fell by 6 points in the past quarter, it had been at a very high level in June at 57 points. Germans continue to prefer spending their money over putting it in the bank. The secure employment situation and low interest rates provide planning security for larger purchases. The uncertainty with regard to Greece has yet to change this outlook. The French unsettled by weak economic expectations and Greek crisis Unemployment in France remains high, urgently needed reforms for the employment market are still lacking and the economic outlook is still off course as well. There is also uncertainty regrading whether Greece will withdraw from the European Monetary Union and what sort of consequences this would have for France. It is therefore not surprising that French consumers have a rather skeptical view of the economic trend over the next few months. As a result, the economic expectations have fallen by 5 points since March to 5.5 points. The income expectations were also unable to maintain the slight upward trend of the first three months of the year. The indicator struggled to work its way up to -19 points in March, reaching its highest level since April 2010, but since then it has fallen by 4.7 points. In June, it stood at points. Due the continued high unemployment, the necessary reforms in the employment market, and the risks from a possible Grexit, the French continue to assume that incomes will fall significantly. Only the propensity to buy has recovered slightly over the past three months. It has increased by 4 points since March and was just within the positive range at 1.8 points in June. In April the indicator saw its highest level since July 2007, reaching 3.5 points. United Kingdom: consumers unsettled despite a growing economy In the United Kingdom, the mood among consumers has worsened over the past three months. The economic outlook has fallen from 27.9 points in March to 19.7 points in June. The risks of a possible Greek exit from the European Monetary Union appeared to overshadow the very favorable economic data for the United Kingdom. The picture was somewhat different for the income expectations. Although the indicator also fell to 11.9 points, just under 4 points lower compared to 2

3 March, it remained at the same level over the course of the past year aside from a few fluctuations. In April, it posted its highest level since December 2007 at 16.6 points. The propensity to buy in the United Kingdom increased in the second quarter by just under 6 points. In June it reached 14.6 points, which was its best level since October Although this level is still low, the indicator is nevertheless showing a clear upward trend. Italian consumers do not yet expect economic growth Despite comprehensive reforms in the past year, the business activity has still not fully picked up. There are also concerns about what effect a possible Greek exit from the euro zone would have on the Italian economy. Italian consumers thus still do not expect that the economy will recover sustainably from the long recession over the next few months. Accordingly, the economic expectations dropped in the second quarter by 16 points to points. In contrast, the income expectations are steadily improving, albeit slowly. It is currently still in the negative range at -4.5 points and is thus just under the level it was in March. However, there has been an overall upward trend since last fall. This applies to Italians propensity to buy as well. This indicator increased by more than 17 points in total since June At 4.8 points, it is currently at its highest level since August Italian consumers are slowly beginning to picture themselves spending more money again on larger purchases that go beyond their daily needs. Spanish consumers view themselves as relatively unaffected by the Greek crisis Spanish consumers continue to anticipate a significant upward trend in the business activity. Although the corresponding indicator fell in the past quarter by 3.6 points, it continues to be at a very good level with 37.5 points. In April it reached 46.1 points, which was even a new historic high. This is the best value ever measured since polling began in mid At the time of the poll, the Spanish apparently do not yet believe that the upswing in their economy would be affected over the long term by a possible Greek exit. The income expectations also fell slightly by 3.7 points. It was 17.5 points in June. Spanish consumers also continue to anticipate a slight increase in income over the next few months. This is likely due to the slowly receding unemployment level as well as the upcoming vacation season during which many Spaniards expect to find a job in tourism, at least temporarily. These positive initial signs do not affect the propensity to buy, however. After the long and difficult economic crisis of the past few years, Spanish consumers still do not have any money available for larger purchases that 3

4 go beyond their daily needs. The indicator fell by 4.2 points over the past three months and is currently at points. However, it was at -3.9 points in May which is the highest level since February Portugal does not yet anticipate an increase in incomes In comparison to the first quarter, the economic expectations of Portuguese consumers fell slightly in the second quarter to 15.2 points (-0.6 points). However, the mood of Portuguese consumers remained positive overall with regard to their country s economic trend. While the indicator was in the negative range a year ago at -0.5 points, it has been stable at its current level since last fall. The Portuguese are confident that its economy will also see steady, if restrained, growth over the next few months. The positive mood of Portuguese consumers overall with regard to the economic situation is, however, not reflected in their income expectations. In March, the indicator was at 4.7 points but it has since lost 3.8 points, falling to 0.9 points in June. The income expectations were still significantly higher than the level of the previous year (June 2014: points), however, it reached its lowest level since October In light of the continued high level of unemployment, Portuguese consumers continue to only be able to afford the daily necessities. After the long recession, money continues to be unavailable for large purchases. The propensity to buy in June was at -24 points, which was only slightly above the level in March (-24.5 points). The Netherlands: good economic data stronger than crisis in Greece The favorable economic development in the Netherlands bolstered the assumption of consumers that it will continue over the next months. Although the economic expectations in June, at 29.4 points, were only just above their value in March, that level can still be considered very good. Currently, the Dutch seem to be unfazed by the tug-of-war over the developments in Greece. The positive economic data and the slight decrease in unemployment are also slowly having an effect on the income expectations. Although the indicator was still in the negative range at -6.2 points in June, the trend has since been moving upward again. In comparison to March, a gain of 7.4 points was recorded. This trend is also apparent in the propensity to buy, which has stabilized in the positive range in recent months. At 6.8 points, the level of the indicator is still very low, however, this is the highest level since January Belgians economic upturn Consumers are increasingly gaining confidence in the the slight but steady upswing in the Belgian economy. As a result, the economic expectations in 4

5 the last quarter increased by 7.3 points to 18.3 points. They still remain below the previous year s level of 23.4 points, however, they have been showing a consistent upward trend in recent months. This positive assessment has not yet affected the income expectations among Belgians, however. Although the indicator increased by just under 5 points in the second quarter, it is still decisively in the negative range at points. Increases in income are a long way off for Belgian consumers. Nevertheless, the propensity to buy is currently in the positive range at 8.5 points and just above the level from March (+0.5 points). Money remains tight, but Belgians are showing a greater propensity to make larger purchases than consumers in many other European countries. Greece: economic and income expectations significantly reduced Greece s looming national bankruptcy and the tense discussion about whether the country will remain in the European Monetary Union has had a significant effect on the economic expectations of the Greek consumers. While the indicator increased by 27.4 points to 14.3 points from January to March after the victory of the leftist party Syriza, it remained at -9.9 points in June. Therefore, the economic expectations fell by 24.2 points and correspond to the level from the previous year (June 2014: -10 points). Consumer uncertainty with regard to the country s economic situation is reflected in the income expectations. Following the huge increase in the income expectations in the first quarter (+29.1 points to 6.9), the Greeks are accordingly not currently expecting stable wages and salaries in light of the current situation. Since January, the income expectations have steadily fallen. At the end of the second quarter they were at points. Despite the negative mood of consumers regarding the trend in wages and salaries as well as the economic situation, the propensity to buy is showing a positive trend. The indicator increased by more than 19 points over the past three months to The hope of consumers for successful negotiations by the Greek government with their creditors was decisive here. Since the negotiations failed at the end of June and Greece is now facing national bankruptcy, the propensity to buy in the coming months may fall sharply once again. Austrians take a pessimistic view of the economic trend The mood of the Austrian consumer is very unsettled. The economic expectations were at points in June. This is 3.3 points less than in March of this year. A year ago, the indicator was just under 15 points higher. This trend reflects the country s economic stagnation. Despite the slight increase in unemployment, the income expectations increased by 9 points to 17.7 points in the second quarter. Over the course of 5

6 the past year, the indicator recovered by about 13 points overall, however, with major fluctuations. It reached its highest level in November with 30.2 points and its lowest level in September with 1.5 points. In accordance with the weak economic data and the negative economic outlook, the propensity of Austrian consumers to buy has also dropped significantly in the last three months by 19.7 points to 4.8. This is the lowest level since October of last year. Poland: consumers mood somewhat subdued despite best economic data The Polish economy is currently one of the fastest growing economies in Europe, growing by more than 3 percent compared to the previous year. The economic expectations of Polish consumers are rather restrained by comparison. It is possible that the Greek crisis has also made Polish consumers feel unsettled, although the country is not part of the monetary union. It is also possible that the continuing tensions between Russia and the EU are affecting the mood in Poland. The indicator was at 19.2 points in June, which was just under 5 points more than in March. In April it had reached 25.6 points, the highest level since October The income expectations had also reached the highest level in a long time in April with 26.2 points. This indicator has not shown a higher level since March Currently it is at 16.4 points, which indicates a slight gain of 1.5 points since March. Compared with March, the propensity to spend money on larger purchases has increased in Poland by 6.6 points to 9.1. The highest value for this indicator in the interim was 22.5 points in April. The last time it was higher than this was in February Czech Republic: Greek crisis does not seem to have worried consumers The favorable economic development in the Czech Republic also continues to provide consumers with a positive view of the future. The economic expectations are currently at 31.3 points, which is 6.6 points higher than it was three months ago. The uncertainty about whether Greece will stay in the European Monetary Union seems to have not affected consumers to date. This may also be due to the fact that the Czech Republic is not a member of the common currency area. In addition, the good economic data apparently carries greater weight. This is also apparent in the income expectations. Although the indicator fell by 7.4 points in the second quarter, the current level is extraordinarily good at 41.4 points. A year ago the income expectations for the Czechs was still at 28.3 points. 6

7 However, Czech consumers are still not spending money on major purchases. The corresponding indicator was at 4.9 points in June and thus just barely over the zero line which is the first signal of the fundamental propensity of some consumers to make greater expenditures. Slovakia: propensity to buy tumbles Although the economy is booming, Slovakian consumers expect a more subdued economic trend over the coming months. The economic expectations fell significantly in the second quarter by 15.7 points to the current level of 9.7 points. The reasons for this could be the crisis in Greece which was unresolved at the time of the poll, as well as the conflict between Russia and the Ukraine. The income expectations have also fallen by 7 points to 19.8 since March. However, this level can still be considered good. Slovakians are expecting higher incomes as well. This may be primarily attributable to the slow but steadily declining unemployment rate. This trend, however, is currently not reflected in the propensity to buy. In the last quarter, this indicator tumbled, droping more than 19 points. In June it was at -5.4 points. This is the lowest value since July Slovakian consumers are holding on to their money and buying only the items that are necessary for their daily needs. Despite favorable economic data, Bulgarians do not believe in a further upswing The economy in Bulgaria grew significantly in the past year. Nevertheless, consumers apparently do not expect this positive trend to last. The economic expectations improved in the second quarter by only 1.5 points to points. The cautious assessment, despite good economic data, may still be due to the unresolved crisis between Russia and Ukraine. Bulgarian consumers evaluate the situation similarly with regard to their incomes. Although the associated indicator increased again in the second quarter (+8.3 points), it is still in the negative range at Bulgaria thus does not anticipate an increase in wages and salaries over the next few months. Only a few Bulgarian consumers continue to spend money on major purchases that go beyond their daily needs. The propensity to buy was at 10.5 points in June. This was about 1.6 points more than in March. Slight stagnation of the economic euphoria in Romania Romanian consumers continue to expect positive economic growth. Although the economic expectations fell by 1.1 points to the current level of 21.3 points in the second quarter, a significant gain of almost 32 points was recorded in comparison with June

8 In accordance with the favorable economic conditions, Romanians continue to expect slightly increased wages and salaries. The economic outlook was 18.5 points in June. However, the standard of living in the Eastern European country continues to remain very low. Incomes are just enough to enable employees to pay for their daily necessities. It is therefore no surprise that the propensity to buy remains in the negative range with points, although it increased by 4.7 points in the second quarter. Major purchases continue to remain almost impossible for the majority of Romanians. Further information: Rolf Bürkl, , About the study The results of the GfK Consumer Climate Europe are taken from the consumer poll that is conducted on behalf of the EU Commission in all countries of the European Union. Approximately 40,000 persons are surveyed in the 28 countries every month. These respondents are representative of the adult population of the EU. The basis of the GfK indicators for the Consumer Climate Europe are the polls on the mood of consumers carried out every month. On the one hand, this involves the macroeconomic situation of the individual countries, and on the other hand, the situation of the households themselves. The questions on the Consumer Climate Europe are primarily conducted every month in as part of a so-called omnibus survey. This involves a multitopic poll that is conducted either by phone or face-to-face, meaning as part of a personal interview. Five questions are selected for the GfK Consumer Climate Europe from a total of 12 questions in the monthly questionnaire because they play a significant role in the consumer climate. Calculation of the five selected indicators for economic, price, and income expectations as well as the propensity to buy and save: The basis for determining the indicators are the so-called bottom lines. Here, the share of consumers who responded negatively (for example, the financial situation of the household has deteriorated (significantly)) is subtracted from the share of those who responded positively (for example, the financial situation of the household has improved (significantly)). In an additional step, this bottom line is standardized and transformed using a common statistical process so that the long-term average of the indicator is at 0 points and a theoretical value range of +100 to -100 is shown. Empirically, however, most values since the year 1980 were between +60 and

9 If an indicator shows a positive value, then this factor is evaluated by consumers to be above average over the long-term. Likewise, it is the opposite for negative values. As a result of the standardization, the indicators can be better compared among different countries because mentality-based level differences in the response behavior can be offset, however, nothing is changed in the basic course of the indicator. About GfK GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK s long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers experiences and choices. For more information, please visit or follow GfK on Twitter: Responsible under press legislation: GfK SE, Corporate Communications Jan Saeger Nordwestring Nuremberg Germany T public.relations@gfk.com 9

GfK Consumer Climate Europe: Uncertainty impacts consumer sentiment. GfK Consumer Climate Europe results for the third quarter of 2016

GfK Consumer Climate Europe: Uncertainty impacts consumer sentiment. GfK Consumer Climate Europe results for the third quarter of 2016 Press release October 14, 2016 Rolf Bürkl Tel. +49 911 395 3056 rolf.buerkl@gfk.com Ursula Fleischmann Corporate Communications Tel: +49 911 395 2745 ursula.fleischmann@gfk.com GfK Consumer Climate Europe: