German economic growth will be weaker than expected in 2022. Three institutions - IfW, RWI and IWH - predict growth in the range of 2.1% to 3.1%, reports Reuters.

The German government most recently forecast growth in 2022 at 3.6%, compared to 2.9% last year.

IfW cut its forecast by almost half to 2.1% from 4, but said unsatisfied consumer spending power and unfulfilled industrial orders would cushion the impact of the war in Ukraine on the economy.

The German economy is once again facing strong headwinds, IfW said, citing new supply bottlenecks, high raw material prices and shrinking sales opportunities.

A business survey conducted by the German Chamber of Commerce and Industry (DIHK) found that 60% of companies experience more supply chain disruptions.

RWI revised down its previous forecast in December from 3.9% growth to 2.5%, while IWH sees growth of 3.1%.

RWI noted that its projections were based on the assumption that there would be no further sanctions against Russia and that Russian gas supplies to Germany would continue.

For 2023, RWI and IfW raised their growth forecasts to 3.6% and 3.5% respectively, while IWH forecasts growth of 1.5%.

The institutions also noted that the inflation rate reached between 4.8% and 5.8% in 2022, mainly due to high energy prices.

All three institutes are part of a group that advises the German government.