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German investor confidence weakened unexpectedly in February, highlighting ongoing uncertainty around the strength and sustainability of Europe’s largest economy, according to data released Tuesday by the ZEW economic research institute.
The ZEW economic sentiment index fell to 58.3 points in February, down from 59.6 in January. The reading came in well below market expectations, as analysts polled by Reuters had forecast an increase to 65.0 points. The decline suggests that optimism about Germany’s economic outlook remains vulnerable despite recent signs of stabilization.
In contrast, perceptions of current economic conditions showed continued improvement. The ZEW indicator assessing the present situation rose to minus 65.9 points from minus 72.7 previously, indicating that while conditions remain weak, the pace of deterioration is easing.
ZEW noted that export-oriented sectors recorded moderate to strong improvements in February. Outlooks improved notably for the chemical and pharmaceutical industries, as well as steel and metal production and mechanical engineering. The gains were attributed to stronger-than-expected incoming orders toward the end of 2025, offering some support to Germany’s industrial base.
Despite lingering uncertainty, ZEW also highlighted a gradual improvement in prospects for private consumption, suggesting that domestic demand may begin to provide a modest counterbalance to external headwinds in the months ahead.
Overall, the data point to a recovery that is still uneven, with improving current conditions offset by wavering investor confidence and persistent structural and geopolitical challenges.
