The German government expects Europe's largest economy to slip into recession next year, contracting by 0.4 percent, as the energy crisis, rising prices and supply disruptions take their toll, Reuters reported.

The government lowered its growth forecast for 2022 to 1.4 percent from April's 2.2 percent forecast. Previously, it had projected growth of 2.5% for 2023.

The government also expects inflation to remain in the high single digits at 7.9% this year and 8% in 2023, the source said.

Economy Minister Robert Habeck is expected to release the figures next week.