German Consumer Sentiment Stays at Seven-Year High

FRANKFURT—Consumer sentiment in Germany remains at a seven-year high, a leading market research institute said Wednesday, but it warned that a further escalation of the crisis in Crimea would likely sap consumer confidence in Europe's largest economy.

GfK's forward-looking consumer sentiment indicator was 8.5 points in April, the same level as in March, when it reached its highest point since January 2007. The results matched forecasts from analysts polled by The Wall Street Journal.

"It remains to be seen just how the current events in Crimea will affect the mood amongst consumers," GfK said in its monthly survey of roughly 2,000 German consumers, acknowledging that the survey was conducted before the crisis escalated.

"It cannot be ruled out that this event will unsettle consumers in the coming weeks," the research institute added.

Optimism about the economy and a stable job market have helped boost economic expectations for Germans, but the Russian-led referendum and subsequent annexation of the Crimean peninsula could spook consumers at a time when domestic demand is a key driver of economic growth in Germany. Were the crisis to spread to other parts of Ukraine, resulting in further sanctions from the West, it would likely hurt consumers' mood, the survey said.

More than one-third of Germany's gas and crude-oil imports come from Russia.

Tension between Russia and the European Union appear to have already hurt business confidence in Germany. German business confidence weakened in March in part as a result of Russia's takeover of the Crimean peninsula, according to a survey of 7,000 companies from the Ifo institute released Tuesday. The ZEW indicator published last week also flagged the crisis in Ukraine as the reason for lackluster investor confidence.

Despite the tension in Ukraine, German households are increasingly optimistic about the economic outlook, the survey found, as the corresponding GfK indicator for March rose to 33.2. Record-low interest rates in the euro zone also have Germans buying more, the survey showed, while Germans' income expectations fell in March, but remained at a very high level.

—Todd Buell and Andrea Thomas contributed to this article.

Write to Christopher Lawton at christopher.lawton@wsj.com

Source:

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