The BDI industry association in Germany said that it expects Europe's largest economy to grow 3.5% this year, a more cautious projection than the government, warning that the pandemic might lead to another "stop-and-go" year for businesses.

"The order books are full, but manufacturing isn't keeping up with demand. Large sections of the economy are affected by pandemic limitations and supply bottlenecks" Siegfried Russwurm, President of the BDI, stated.

The BDI projection is less optimistic than the government's estimates, which were released in October and expected that GDP growth would rise to 4.1% this year from a predicted 2.6% in 2021.

BDI: German economy expected to grow by 3.5pc this year | Money | Malay Mail

The industrial lobby group predicted that export growth would be cut in half this year, to around 4%, citing supply issues with microchips and other critical components, which have severely hampered output in Germany's massive automobile sector.

According to Russwurm, the Omicron coronavirus variant is clouding global growth prospects, with Germany in particular facing the risk of China, its largest trading partner, becoming paralysed again if authorities there respond to a new outbreak with tight "zero COVID" lockdown measures.

The BDI president supports Chancellor Olaf Scholz's request for a controversial coronavirus vaccination mandate to improve Germany's low inoculation rate. Around 72% of Germany's population has received two vaccines against the virus, with 43.5% receiving a booster injection.

"It's clearly not an option now to navigate until the warmer season, then take advantage of the reduced incidence rates over the summer, only to discover in the autumn that the vaccination rate is still too low," Russwurm said.