German investor sentiment fell sharply in April – ZEW

Businesses are concerned about the long-term prospects of energy shortages

German investor sentiment fell to its lowest level in more than three years in April, according to a survey by the ZEW Center for Economic Research.

The economic sentiment indicator fell to minus 17.2 points this month, the lowest reading since December 2022 (minus 23.3) and significantly worse than the minus 0.5 points recorded in March.

As ZEW President Achim Wambach noted, economic expectations in Germany have entered negative territory.

“The economic consequences of the war with Iran for the German economy go far beyond rising prices: companies are concerned about long-term energy shortages, and this is dampening investment and weakening the effect of government stimulus measures,” he explained.

According to ZEW, the outlook for the chemical and pharmaceutical industries, as well as the steel sector, has deteriorated significantly this month.

The assessment of the current economic situation is also declining; the corresponding indicator for the country reached minus 73.7 points, which is 10.8 points lower than the March figure.

As a reminder, the German industry will face stagnation at best this year, according to the industry association BDI. The association warned that rising energy costs, supply chain risks, and internal structural weaknesses are putting pressure on the country’s economy.

The association downgraded its forecast following a weak start to the year and amid the escalation in the Middle East. The BDI president called on the government to agree on a broad package of reforms by summer to stimulate growth and investment.