BERLIN (Reuters).- The German economy shrank more than anticipated in the fourth quarter last year’s final quarter, according to data released Friday. This was due to restrictions that slow down the spread Omicron.

According to the Federal Statistics Office, Europe’s largest economy shrank 0.7% quarter over quarter adjusted. According to Reuters, the economy would shrink 0.3% according to a poll.

Preliminary data revealed that the private sector’s consumption has declined significantly. However, government spending has increased. Also, the construction industry contracted.

German GDP grew 2.8% last year. The government has reduced its forecast for economic growth to 3.6% in 2022. Robert Habeck from the Economy Ministry said Friday that he anticipates a slowdown down to 2.3% in 2023.

Thomas Gitzel, VP Bank Group stated that while easing shortages of raw materials should allow the economy to continue its growth trajectory, the threat from a pandemic is real.

In a note, he stated that there were two risks to his supply chain: a worsening of supply chains due to the rapidly spreading Omicron wave from China and an increase in military aggression on Ukraine’s eastern borders.

If the Kremlin does not respond to European sanctions, Western countries fear that Russia could invade Ukraine and cause a worsening energy crisis in Europe.