In a March 2026 survey, the German Economic Forecast by the Center for European Economic Research (ZEW) showed a sharp deterioration in outlook. The ZEW expectation index for Germany fell by 58.8 points to -0.5, a decline of 58.8 points from the previous month.
Despite that, the assessment of the present economic situation improved slightly. The current‑situational indicator now reads -62.9, 3.0 points higher than the level recorded a month earlier.
ZEW President Achim Wambach explained that the escalation in the Middle East is driving energy prices sharply upward, thereby tightening inflationary pressure. “The risk is that the ongoing recovery trend in the economy could be slowed” he said, adding that the magnitude of the effects will depend on how long and intense the conflict remains. Financial‑market experts, however, remain skeptical that the conflict will end quickly.
Only a few sectors showed any improvement in March. Energy‑intensive industries suffered the biggest setbacks: the chemicals and pharmaceuticals sector slid 43.6 points, the automotive industry fell 34.3 points, and machinery manufacturing declined 35.5 points compared with the prior month. Steel, metal and construction industries also recorded strong downturns, the construction drop possibly linked to expectations of rising interest rates. Roughly 80 % of respondents anticipate inflationary pressure both in Germany and across the Eurozone.
Eurozone expectations also fell sharply in March, dipping into negative territory at -8.5 points-down 47.9 points from February. The assessment of the overall situation deteriorated as well, standing at -29.9 points, 16.3 points below the previous month.
