By: The Quinnipiac University Economics Research Team, Jack French
Consumer Confidence Down Across the Board
Consumer confidence fell to its lowest point in at least six years across the Visegrád Four and Romania. This directly corresponds to the coronavirus pandemic and the resulting massive drop off in GDP growth. Eurostat’s consumer confidence index includes information about general economic and financial conditions as well as trends in prices, unemployment, and savings.
Year to Date, Coronavirus Shock Still in Effect
A plummet in consumer confidence was to be expected back in March. The slow rise since then is the greater concern. Comparatively, Hungary reached the lowest point of any of the countries and is now just above Slovakia. Czech’s confidence index fell the least and is still closest to where it was over the winter. The EU is right around the center of the pack, just above Poland but below Czech. While each index fell with different levels of magnitude, the behavior of each is closely correlated. No country has made a full recovery yet.
Relation to GDP
Consumption is a major contributor to gross domestic product. Up until this year GDP growth was steady and positive for much of the past decade. Six or seven years ago consumer confidence took off in CEE countries and the broader European Union as well. However, even before this year, sentiment had begun declining for several of the countries, most notably in Czech and the EU. The slight downturn in confidence began in 2018 but was nothing in comparison to the drop in March and April of this year. Each country’s index fell to its lowest point in years. The perceived temporariness of the current pandemic driven economic downturn may be keeping sentiment afloat compared to what a ten percent or more drop in GDP would do under different conditions.