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ECONOMY

Retailers expect booming Christmas trade

German retailers believe the crucial Christmas shopping season will be the best in a long time, with sales expected to rise by 2.5 percent in Europe's top economy.

Retailers expect booming Christmas trade
Photo: DPA

“2010 could be our best Christmas in years,” despite severe winter weather, said Kai Falk, a spokesman for the HDE retail association.

The association forecasts total retail sales of €77 billion ($101 billion) in the vital last two months of the year, a gain of 2.5 percent from the same period last year.

“This would be a return to normality” after years of crisis, Falk told news agency AFP.

After a devastating recession in 2009, when the economy shrank by nearly five percent, Germany has rebounded strongly, with growth of 3.4 percent expected this year.

Analysts say the economy is also becoming more broad-based, with domestic demand supplementing Germany’s already powerful export sector. In its latest reading of German business sentiment released last week, the Ifo economic research institute found that confidence ended the year at an all-time high thanks notably to gains in the retail sector.

“We are also expecting booming post-Christmas trade,” Falk said.

AFP/mry

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ECONOMY

Swedish economy to grind to a halt as interest rates kick in

Sweden faces an economic slump next year that will see economic growth grind to a complete stop, Sweden's official government economics forecaster, has warned.

Swedish economy to grind to a halt as interest rates kick in

Sweden’s National Institute of Economic Research, which is tasked with tracking the business cycle for the Swedish government, warned in its quarterly forecast on Wednesday that greater than expected energy prices, interest rate rises, and stubborn inflation rates, Sweden was facing a significant downturn. 

The institute has shaved 1.6 percentage points off its forecast for growth in 2023, leaving the economy at a standstill, contracting -0.1 percent over the year. 

The institute now expects unemployment of 7.7 percent in 2023, up from a forecast of 7.5 percent given when in its last forecast in June.

“We can see that households are already starting to reign in their consumption,” said Ylva Hedén Westerdahl, the institute’s head of forecasting, saying this was happening “a little earlier than we had thought”. 

“We thought this would have happened when electricity bills went up, and interest rates went up a little more,” she continued. 

The bank expects household consumption to contract in 2023, something that she said was “quite unusual” and had not happened since Sweden’s 1990s economic crisis, apart from in the immediate aftermath of the Covid-19 pandemic. 

This was partly down to a five percent reduction in real salaries in Sweden in 2022, taking into account inflation, which the institute expects to be followed by a further two percent fall in real salaries in 2023. 

If the incoming Moderate-led government goes ahead with plans to reimburse consumers for high power prices, however, this would counterbalance the impact of inflation, leaving Swedish households’ purchasing power unchanged. 

The institute said it expected inflation to average 7.7 percent this year and 4.6 percent in 2023, both higher than it had forecast earlier.

Sweden’s Riksbank central bank this month hike its key interest rate by a full percentage point, after inflation hit 9 percent in August, the biggest single hike since the 1990s. 

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