Germany’s ZEW Economic Sentiment plunged sharply in March, highlighting how rapidly confidence is deteriorating under the weight of the global energy shock. The expectations index collapsed from 58.3 to -0.5, far below market forecasts of 39.0, while Eurozone sentiment followed suit, dropping from 39.4 to -8.5.
The primary driver is the escalation in Middle East conflict, which has pushed energy prices sharply higher and revived inflation concerns across Europe. ZEW President Achim Wambach warned that the surge in energy costs is increasing inflationary pressure and raising the risk that Germany’s nascent recovery could stall. “The financial market experts are sceptical that a quick resolution of the conflict will take place,” he added.
In contrast, the current situation index showed modest improvement, rising from -65.9 to -62.9 in Germany, suggesting that present conditions are stabilizing slightly even as the outlook darkens. On the other hand, current situation in Eurozone also rose fell -16.3 pts to -29.9.
