Aline Schuiling, senior economist at ABN AMRO, points out that the France and Germany published consumer confidence data yesterday which showed that the Germany’s first estimate of confidence in July fell to 9.8, down from 10.1 in June while France’s consumer confidence increased to 101 in June, up from 99 in May.
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“Actually, confidence amongst French consumers has risen non-stop in every month since the start of the year, whereas in Germany consumers have become more gloomy almost non-stop during this period. An important reason for this divergence seems to be that the German economy is much more exposed to the decline in global trade and the uncertainties related to the global trade conflict than France’s.”
“The share of exports to countries outside the EU in Germany’s GDP (approximately 16%) is around twice as high as that of France. Indeed, Germany’s exports growth has slowed much more sharply than France’s export growth since the start of 2018. Consequently, overall GDP growth in Germany has also been much weaker than in France, with Germany’s GDP having grown by merely 0.2% in total during the three quarters to 2019Q1 and France’s GDP by 1.0%.”
“On top of that there might have been some positive impact on confidence in France from the extra government spending and tax cuts that were announced by President Macron following the yellow vests protest. The details of France’s consumer confidence report shows that the assessment of the past and future standard of living each increased noticeably in June and each moved to levels above their long-term averages in that month.”
“Meanwhile, Germany has not yet published the details of confidence in July, but the detailed report for June shows that the decline in confidence in that month was entirely due to a drop in the component gauging income expectations.”
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