The ZEW Indicator of Economic Sentiment for the Euro Area dropped sharply by 11.9 points to -20.4 in April 2026, its lowest level since December 2022 and well below expectations of -3.6. The decline reflects growing concern over the escalating conflict in the Middle East, which is increasingly seen as a risk to energy prices and supply chains across Europe, raising fears of longer term energy shortages for businesses. In March, 44% of analysts expected no change in economic activity, while 38.2% anticipated a deterioration and 17.8% expected improvement. The assessment of the current situation also weakened, with the index falling 13.1 points to -43, while inflation expectations remained broadly unchanged at 79.