German Economic Confidence Plunges Amid Escalating Middle East Tension

(RTTNews) - German investor confidence declined significantly in March as the escalating Middle East tension challenges economic recovery and poses risk to inflation. The investor sentiment index declined to -0.5 from +58.3 in February. The score hit the lowest since April 2025 and remained well below the expected score of +38.7.

Meanwhile, the current situation indicator hit -62.9 in March but better than forecast of -67.1.

"The escalation in the Middle East spikes energy prices and increases inflationary pressure," ZEW President Achim Wambach said.

This heightens the risk for the German economy that the emerging trend of economic recovery will slow down.

"How strong these effects will turn out depends on the intensity and the duration of the conflict," added Wambach. The financial market experts are skeptical that a quick resolution of the conflict will take place, he said.

The survey showed that the energy-intensive industries were affected mostly. About 80 percent of respondents expect inflationary pressures to build up both in Germany and in the euro area.

Economic confidence in the Eurozone also plummeted into negative territory. The economic confidence index plunged by 47.9 points to -8.5 in March. Similarly, the current situation indicator slid 16.3 points to -29.9 in March.