Germans will have 700 euros more disposable in-come in 2008
Tuesday December 18th 2007
Filed Under GfK GeoMarketing
Bruchsal, December 18, 2007
Germans will have 700 euros more disposable in-come in 2008
GfK survey on purchasing power in Germany
German consumers will have an average of 700 euros more to spend in 2008 than in the current year. With this growth of approximately 3.8%, purchasing power is growing faster than inflation. South Germany, in particular, and the areas around major towns and cities are the most affluent, with the new federal states also continuing to catch up. These are the findings published by GfK GeoMarketing in their current survey of purchasing power in Germany.
According to the findings of the GfK survey, German consumers are forecast to have disposable incomes totaling EUR 1,542 billion in 2008. This figure includes state benefits like unemployment benefit, child benefit and pensions. This corresponds to an average per capita purchasing power or disposable income of EUR 18,734 per annum, which every German can spend on the necessities of life and consumer goods. The figure is almost 700 euros higher than for 2007 and represents growth of around 3.8%. It means that the growth of the average per capita purchasing power exceeds the maximum rate of 2% inflation forecast by the European Central Bank for 2008. This means, Germans will have more money to spend on rentals, savings, services and retail consumer goods than this year. German purchasing power has been continually rising for many years. Although there are no double digit increases, affluence is continuing to grow at a high level. In terms of business, the challenge is to make products and services more attractive in order to release the consumer potential of Germans, who are noted for being avid savers.
Bavaria is an oasis of affluence
Regional differences in consumer potential are decisive considerations when businesses are choosing their locations in Germany. According to the GfK survey on purchasing power, Bavaria’s inhabitants with an average disposable income of EUR 20,340 per capita are the most affluent members of German society. In more than a quarter of all Bavarian districts, the average purchasing power is 10% or more above the German average. Purchasing power is highest above the German average in the districts to the east of Munich, and growth is anticipated to continue in 2008. Seven of the ten districts of Germany with the highest purchasing power are located in Bavaria and in a national purchasing power ranking, 39 Bavarian districts the top 100.
In neighboring Baden-Württemberg also, at EUR 20,026, per capita purchasing power is steadily above the German average. Sixteen of the state’s districts are in the top 100 rankings, followed by North Rhine Westphalia with 15 and Hessen with 12 districts. Another area of high purchasing power is centered in the region around Hamburg. In total, the regional breakdown shows that German purchasing power runs highest along an unbroken line drawn from south to north and slightly west of the center of Germany.
The East continues to catch up
Conversely, the per capita value in all districts of Germany’s eastern states remains below the national average, although nowhere does it drop below 25% of the German average. This even applies to Mecklenburg Western Pomerania, a state formerly characterized by a particular structural weakness. Although there is still a significant discrepancy between East and West, the level of affluence is constantly increasing in most of the eastern states of Germany. In fact, several areas there are developing at a faster rate than some western regions. An example of this is Dresden, whose inhabitants have an average disposable income of EUR 17,182; this is around EUR 1,000 more than the population of Regen in Bavaria has at disposal for consumer spending. Dresden and Gera, Jena and Erfurt together form a “string of pearls” of key concentrations of regional purchasing power in the East.
Rural districts beat urban areas
The GfK purchasing power survey shows that the rural areas around major towns and cities continue to benefit from the long-time trend that higher income groups used to prefer living in suburbs outside the city centers. The exception to this is Munich, which is the only urban district present in the top ten German purchasing power rankings. More typical is Karlsruhe: The rural district ranks at 61, with an purchasing power nine percent above the national average. The urban district, by contrast is only 4.5% above the national average and comes in well below at 110th place. One of the reasons for this is that – due to the relative lack of attractive residential accommodation for well-off citizens–, purchasing power is often located in the suburbs, or just outside the city center areas. Local studies have shown that in the case of the larger towns and cities in particular, it is lower income groups such as students, people in their first jobs or migrants who tend to live in the inner-urban areas.
The survey
The purchasing power survey was first published by GfK as early as 1937. It quantifies disposable income after taxes and social contributions and including state benefits on a per capita and per annum basis. It is calculated in euros and takes the form of an index (German average = 100). The calculations are based on salary and income tax data, and take into account state benefits and forecasts given by financial institutes. The purchasing power survey covers all German urban and rural districts, municipalities and postal code areas, as well as 2.4 million street sections.
The purchasing power survey, which measures disposable income at the place of residence and not at the point where it is spent, is an indicator of the consumer potential in a certain area or regional market. For example, it is used for calculating catchment areas and location planning by businesses and companies.
Further information
Cornelia Lichtner, Tel: +49 (0) 7251 9295-270, email: c.lichtner@gfk-geomarketing.com or at
www.gfk-geomarketing.com/purchasing_power
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Press Information:
Ms. Cornelia Lichtner
Public Relations
Phone +49 (0)7251 / 9295-270
Fax +49 (0)7251 / 9295-290
c.lichtner@gfk-geomarketing.com
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