Germany's ZEW investor expectations leap to 10.5, driven by Iran peace hopes

German investor confidence improved far more than anticipated in June, with the ZEW Indicator of Economic Sentiment jumping to plus 10.5 points, up from minus 10.2 in May. The survey of 190 financial analysts and institutional investors, conducted between 8 and 15 June, showed optimism driven almost entirely by signals that the war between the United States and Iran may soon end.

Survey results and expectations

Economists polled by various news agencies had expected a much more modest improvement, with median forecasts ranging from minus 8.0 to minus 5.5. The actual 20.7-point surge brought the index into positive territory for the first time in three months. In February, before the conflict escalated, the indicator stood at plus 58.3.

“The experts are betting that the Iran conflict is nearing its end.”

The current situation assessment, however, continued to weaken. That sub-index fell 3.2 points to minus 81.0, worse than the minus 78.0 economists had pencilled in and far below its already depressed May level.

Iran conflict as the decisive factor

ZEW President Achim Wambach directly linked the rebound in expectations to geopolitics, saying the massive pressure on energy prices and inflation should ease if the war concludes, benefiting energy-intensive industry and private households.

“The economic expectations of the surveyed analysts are back in positive territory for the first time in three months at 10.5 points, driven by the hope of a settlement of the conflict in the Persian Gulf.”

Henze, an economist at Deutsche Bank Research, cautioned that the renewed deterioration in the current situation assessment was a downer, adding that even a favourable geopolitical development would take time to reduce headwinds for the German economy.

Economic backdrop and growth forecasts

Germany's GDP grew by 0.3 percent in the first quarter, helped by rising private and government consumption. Still, the broader outlook remains subdued. The RWI economic institute trimmed its growth forecasts, now expecting GDP to expand by 0.8 percent in both 2026 and 2027, down from 0.9 percent and 1.2 percent respectively in its March projections. The institute cited the Iran war and associated energy price increases as brakes on the recovery.

2026 (March)0.9%

2026 (June)0.8%

2027 (March)1.2%

2027 (June)0.8%

2026 (March)

0.9 %

2026 (June)

0.8 %

2027 (March)

1.2 %

2027 (June)

0.8 %

Data from the article text

Eurozone parallels

The ZEW survey for the wider euro area painted a similar picture: the expectations indicator climbed 18.6 points to plus 9.5, while the gauge of current conditions slipped 2.0 points to minus 43.4.