* Survey was conducted before crisis in Cyprus escalated
* Germans more upbeat about the economy
* Consumers' willingness to buy falls slightly
By Michelle Martin
BERLIN, March 27 Consumer morale in Germany,
Europe's largest economy, was stable heading into April but
developments in crisis-stricken Cyprus could to hit confidence
going forward, market research group GfK said on Wednesday.
The forward-looking consumer sentiment indicator, based on a
survey of around 2,000 Germans, held steady at 5.9 going into
April, helped by an improvement in economic expectations, though
consumers became slightly less willing to splash out on goods
and were also a bit more downbeat about their future earnings.
GfK said the survey was conducted before the idea of forcing
savers to contribute to a Cypriot rescue package was announced
so the results did not show any impact from the deepening crisis
The euro zone agreed on March 16 to demand big and small
depositors in banks forfeit some money to stave off bankruptcy
but earlier this week decided to penalise large bank depositors
and spare smaller accounts holding less than 100,000 euros.
"However, current events in Cyprus may damage consumer trust
and become a burden on the consumer climate," GfK said but
nonetheless confirmed its prediction that private consumption
would grow by 1 percent this year.
Economic advisers to the German government more than halved
their forecast for 2013 growth on Monday as prospects for trade
and investment remain weak and said domestic demand would be the
main driver of growth.
For a third straight month consumers became more optimistic
about the German economy, which contracted by 0.6 percent in the
last three months of 2012 but is expected to have returned to
moderate growth in the first quarter of this year.
"The election result in Italy and the subsequent uncertain
political future of the third largest economy in the euro zone
has so far not caused the once-again mounting economic optimism
of Germans to falter," GfK said.
"The ongoing recession in the euro zone and the danger of a
renewed eruption of the debt crisis have thus far not been
dampening the economic mood."
Other forward-looking sentiment indicators have also pointed
to a slight upturn in the economy in the first quarter, although
the closely watched Ifo business climate index dipped in March
and some economists have said positive sentiment indicators have
overshot actual performance.
Hard data has painted a mixed picture of Europe's economic
powerhouse, with industrial output stalling and orders sliding,
but retail sales rising sharply, already-low unemployment edging
down and exports increasing.
Germans remained optimistic overall about their future
earnings due to wage rises and moderate inflation, though they
saw their future financial situation worsening slightly compared
with the previous month.
Unions are pushing for inflation-busting wage hikes this
year and regional public sector employees have already achieved
a 5.6 percent raise over two years, while some iron and steel
workers secured a 3 percent increase over 15 months.
Consumers' willingness to buy goods dipped slightly on the
month, but GfK said their desire to shop was still at a good
level due to the stable labour market, easing inflation and the
low interest rates being offered by banks.
German retailer Metro last week predicted
operating earnings would fall in the coming months, partly as
they will be hit by weak consumer spending.
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(Reporting by Michelle Martin; Editing by Stephen Nisbet)