BERLIN (Reuters) – Germany’s Ifo economic institute said on Wednesday it cut its growth forecast for Europe’s largest economy for this year as supply chain disruptions and scarcity of intermediate goods are slowing down the recovery from the COVID-19 pandemic.

According to the Ifo institute, Germany’s Gross Domestic Product (GDP), will grow by 2.5% in this year, 0.8% less than its earlier forecasts, and 5.1% next, an increase of 0.8%.

Timo Wollmershaeuser is the chief economist of Ifo. He stated, “The strong recovery after the coronavirus epidemic, initially expected for the summer,”

Supply bottlenecks of important intermediate goods are causing industrial production to shrink. Wollmershaeuser said that service providers have been recovering well from the coronavirus crises.

Germany’s private sector bank association (BdB), gave an additional forecast for growth, with a positive outlook on 2021. This forecasts GDP growth at 3.3% in 2018 and 4.6% in 2019.

The BdB stated that the biggest threats to the outlook include the increase in coronavirus infection rates and major delivery and production bottlenecks, which have impacted German industry.

However, the BdB said that strong domestic demand and robust private consumption are likely to fuel the recovery in the coming years.

“We anticipate private consumption to rise by 7% by 2022. Christian Ossig, managing director of BdB, stated that this would represent the largest boom since unification.

Ossig said that the problem of coronavirus restrictions causing “compulsory savings” seems to have been resolved. The catch-up effects will continue well into next year.