The German consumer remains financially stable and strong, though this is not particularly translating into increasedlevels of spending, with our forecast for real growth in 2018 at just 1.8%. Low levels of unemployment, easy credit conditions, lowhousehold debt, slowing inflation and a a relatively optimistic economic outlook should be a boon for consumption. Consumerconfidence is also hitting recent highs reflecting this trend, however, retail sales have remained sluggish even as sentiment hasimproved. Sluggish wage growth over the back end of 2017 may be a cause of this but a tightening labour market should lead tostronger wage growth in 2018.
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