By Miranda Murray BERLIN, April 21 (Reuters) - German investor morale has sunk to its lowest level in more than three years in April as businesses start to feel the economic consequences of the Iran
German Investor Confidence Plunges to 3-Year Low on Iran War and Energy Fears
Investor Sentiment and Economic Impact in Germany
By Miranda Murray
Investor Morale Hits New Lows
BERLIN, April 21 (Reuters) - German investor morale has sunk to its lowest level in more than three years in April as businesses start to feel the economic consequences of the Iran war far beyond price increases, the ZEW economic research institute said on Tuesday.
The institute's morale index fell to minus 17.2 points in April, significantly below the minus 5.0 points expected by analysts polled by Reuters and well down from last month's minus 0.5 points.
It was the lowest reading since December 2022 at minus 23.3.
Concerns Over Energy Supply
"Businesses are concerned about long-term shortages of energy supply, and this discourages investment and weakens the effect of government stimuli," said ZEW president Achim Wambach.
Energy Crisis and Industry Impact
Severe Oil Crisis Remains the Nightmare Scenario
SEVERE OIL CRISIS REMAINS THE NIGHTMARE SCENARIO
The spike in oil and gas prices following the start of joint U.S.-Israeli strikes on Iran on February 28 has added to the struggles of Europe's largest economy as it tries to regain momentum in the long wake of the COVID pandemic.
Blockade of the Strait of Hormuz
Fears of a prolonged energy shortage caused by the blockade on the Strait of Hormuz, through which a fifth of the world's oil is usually shipped, helped lead to the surprisingly sheer drop in the ZEW indicator, said VP Bank economist Thomas Gitzel.
Industry-Specific Declines
Prospects in the chemical and pharmaceutical industries, as well as steel and metal producers, have deteriorated particularly strongly in April, according to ZEW.
"A severe oil crisis remains the nightmare scenario, despite all hopes for a resolution to the conflict," said Hauck Aufhaeuser Lampe Privatbank economist Alexander Krueger.
"Either way, economic growth this year will fall short of the expectations held at the end of 2025."
Government Response and Economic Forecasts
The German government is set to halve its 2026 economic growth forecast to 0.5% and raise its inflation projections when it unveils new forecasts on Wednesday, a source told Reuters last week.
Current Conditions Index
The indicator monitoring current conditions also fell more than expected, to minus 73.7 points. Analysts expected a reading of minus 70.0 points.
(Reporting by Miranda Murray, editing by Linda Pasquini and Hugh Lawson)
