Low interest rates and improving incomes are expected to buoy consumer moods across Europe this year. According to the GfK research group, Germans are set to continue their spending thanks to robust growth.
Private consumption across the European Union was set to rise between 0.5 and 1 percent this year, German consumer research group GfK said on Wednesday, as it released a consumption projection for 2014.
Private consumption would provide a significant boost to economic growth in the 28-nation bloc, GfK said, adding that household spending was starting to pick up from very low current levels in most EU countries.
“If companies create new jobs thus lowering unemployment across Europe, the propensity to increase private spending will rise significantly,” GfK president Matthias Hartmann said in a statement.
The anticipated rise in EU household spending was led by Germany, where consumers were likely to spend 1.5 percent more than in 2013, GfK reported.
Private consumption in Europe's biggest economy had already increased 0.9 percent last year, propping up meager economic growth of just 0.4 percent. According to a government estimate released Wednesday, German gross domestic product (GDP) was set to expand by 1.8 percent in 2014, leading to rising incomes and more jobs.
As a result, Germans were again spending more, providing additional support to the economy as a whole, GfK said. The German groceries sector was benefiting disproportionately from higher spending, while other retail sectors could expect only moderate growth. Moreover, Germans would also buy more private homes, increase spending on upgrading their apartments and for travelling abroad, GfK added.
uhe/ph (Reuters, dpa)