German economic sentiment fell sharply in April, according to the results of a survey published by the ZEW on Tuesday, as the Middle East conflict weighed down on businesses.
The Euro Forex futures contract (6E) fell further following the data as traders also reacted to the ongoing uncertainty around a resolution to the U.S.-Iran conflict.
Crunching the Numbers: The German ZEW Economic Sentiment fell to -17.2 in April from -0.5 in March, while economists had expected a more modest decline to -6.7. This marked the lowest since December 2022.
ZEW Indicator of Economic Sentiment for Germany
Source: ZEW
The assessment of the current economic situation also deteriorated, plunging to -73.7 in April from -62.9.
“The economic consequences of the Iran war for the German economy go far beyond price increases: Businesses are concerned about long-term shortages of energy supply, and this discourages investment and weakens the effect of government stimuli,” said ZEW President Professor Achim Wambach.
Sector-wise, expectations regarding industrials worsened due to the Iran war, with chemical & pharmaceuticals and steel & metal production seeing marked deterioration. The automotive industry, however, saw fairly stable sentiment. Sentiment toward the construction industry turned modestly negative.
Eurozone Sentiment Worsens: The ZEW economic sentiment for the eurozone fell to -20.4 in April from -8.5 in March, compared to the -12.7 consensus estimate. The current economic situation index for the 21-nation group that shares euro as the common currency fell to -43 from -29.9.
