BERLIN, Jan 21 (Reuters) - The German government will cut
its economic growth forecast for this year to 3.6% from its
October estimate of 4.1%, according to a draft of the annual
economic report seen by Reuters on Friday.
The coalition government of Social Democrats, Greens and
Liberals, in power since December, expects the pandemic to
further strain businesses and supply bottlenecks for products
such as semiconductors to persist, further limiting companies'
growth, according to the draft.
Magazine Der Spiegel was first to report the new growth
The new government predicts inflation to reach 3.3% on
average this year, after it soared to 3.1% in 2021 from 0.5% a
year earlier and is still forecasting core inflation, excluding
food and energy prices, to run at 2.5% in 2022, the draft said.
Most economists expect Europe's largest economy to shrink
again in the first three months of 2022 after a fourth-quarter
contraction, driving it into another technical recession,
defined as two consecutive quarters of declining output.
Germany's BDI industry association said earlier this month
it expected the nation's economy to grow 3.5% this year, showing
more caution than the government as it warned that companies
could face another year of "stop-and-go" business due to the
(Reporting by Christian Kraemer, Holger Hansen
Writing by Riham Alkousaa, Kirsti Knolle
Editing by Miranda Murray and Tomasz Janowski)