FRANKFURT – The Iran war continues to pummel investor sentiment in Europe’s largest economy, with the main indicator dropping to its lowest level in more than three years.
Germany’s ZEW thinktank said Tuesday that its expectations indicator for the coming half-year sank to -17.4 points in April versus the market forecast of -5.8 and the March value of -0.5, itself the result of a plunge from 58.3 following the start of the war on the final day of February.
The measure hit 59.6 at the beginning of the year, its best since July 2021, but the forward-looking indicator it is now at its lowest point since December 2022, according to ZEW data.
The DAX 40 index of German blue-chip stocks was trading around 24,600 points in Frankfurt on Tuesday morning, around 300 points higher than its close on the final day of trading before the US and Israel began their military strikes on Iran.
The ZEW said its current conditions indicator for Germany was also worse than expected declining to -73.7 points compared to the estimate of -70.5 and -62.9 last month.
The thinktank’s measure for the Eurozone’s outlook for the next six months plunged to -20.4 points from -8.5 in March and 39.4 in February.
The two-week ceasefire between the main belligerents is set to expire tomorrow, the day when members of a US delegation are expected to meet their Iranian counterparts for a second round of peace talks in Islamabad.
“Despite peace efforts, uncertainty remains high,” Helaba said in a note. “Furthermore, energy prices, despite previous declines, are still at a high level, raising concerns about inflation and the economy.”
Source: ZEW
The long view
Higher costs are just the beginning, according to the head of the ZEW. “The economic consequences of the Iran war for the German economy go far beyond price increases,” said Achim Wambach, president of the institute. “Businesses are concerned about long-term shortages of energy supply, and this discourages investment and weakens the effect of government stimuli.”
Berlin’s plans to spend up to — and potentially more than — EUR 1tn on the country’s military and infrastructure had initially spurred hopes of stronger growth in the world’s fourth-largest economy, but the impact of the war has since doused most of that optimism. The surge in energy prices due to the conflict has prompted economists to revise downward their economic forecasts for most countries, including Germany, where the government has cut its outlook for GDP growth this year to 0.5% from 1.0%, according to a Reuters report. The news service quoted a source as saying the 2027 projection has been reduced to 0.9% from its previous 1.3% estimate.
Frankfurt-based pollster Sentix said last week that its headline investor confidence index for Germany fell to -27.2 points in April, its worst in a year. Additionally, the expectations component of the index this month hit its lowest mark since September 2024.
- Measures for outlook, present worse than expected
- Conflict nears two-month mark
By Eric Culp, European Editor
LiveSquawk News
@eculp.bsky.social
@EricCulpLS
21 April 2026 | 09:55 GMT
FRANKFURT – The Iran war continues to pummel investor sentiment in Europe’s largest economy, with the main indicator dropping to its lowest level in more than three years.
Germany’s ZEW thinktank said Tuesday that its expectations indicator for the coming half-year sank to -17.4 points in April versus the market forecast of -5.8 and the March value of -0.5, itself the result of a plunge from 58.3 following the start of the war on the final day of February.
The measure hit 59.6 at the beginning of the year, its best since July 2021, but the forward-looking indicator it is now at its lowest point since December 2022, according to ZEW data.
The DAX 40 index of German blue-chip stocks was trading around 24,600 points in Frankfurt on Tuesday morning, around 300 points higher than its close on the final day of trading before the US and Israel began their military strikes on Iran.
The ZEW said its current conditions indicator for Germany was also worse than expected declining to -73.7 points compared to the estimate of -70.5 and -62.9 last month.
The thinktank’s measure for the Eurozone’s outlook for the next six months plunged to -20.4 points from -8.5 in March and 39.4 in February.
The two-week ceasefire between the main belligerents is set to expire tomorrow, the day when members of a US delegation are expected to meet their Iranian counterparts for a second round of peace talks in Islamabad.
“Despite peace efforts, uncertainty remains high,” Helaba said in a note. “Furthermore, energy prices, despite previous declines, are still at a high level, raising concerns about inflation and the economy.”
The long view
Higher costs are just the beginning, according to the head of the ZEW. “The economic consequences of the Iran war for the German economy go far beyond price increases,” said Achim Wambach, president of the institute. “Businesses are concerned about long-term shortages of energy supply, and this discourages investment and weakens the effect of government stimuli.”
Berlin’s plans to spend up to — and potentially more than — EUR 1tn on the country’s military and infrastructure had initially spurred hopes of stronger growth in the world’s fourth-largest economy, but the impact of the war has since doused most of that optimism. The surge in energy prices due to the conflict has prompted economists to revise downward their economic forecasts for most countries, including Germany, where the government has cut its outlook for GDP growth this year to 0.5% from 1.0%, according to a Reuters report. The news service quoted a source as saying the 2027 projection has been reduced to 0.9% from its previous 1.3% estimate.
Frankfurt-based pollster Sentix said last week that its headline investor confidence index for Germany fell to -27.2 points in April, its worst in a year. Additionally, the expectations component of the index this month hit its lowest mark since September 2024.
And German business confidence released last month slid to its lowest mark since February 2025.
The next Ifo report is due Friday.
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