The German Institute for Economic Research (DIW) on Wednesday lowered its economic growth forecast to 1.5 per cent and 1.6 per cent of gross domestic product (GDP) for 2018 and 2019, respectively.
The new forecast, which comes against the backdrop of slowing global growth adversely affecting the country's export-orientated economy, represents a reduction of 0.3 percentage points in 2018 and 0.1 percentage points in 2019.
Germany has been hit by labour shortages in the construction and IT industries, while the stalwart automotive industry was hit hard in the third quarter of 2018, when growth was slowed due to the introduction of new emissions tests.
The German economy also faces difficult global headwinds, including the trade conflict between the US and China, and the US and the EU. Another negative factor is the uncertainty surrounding Britain's looming exit from the EU.
The news comes days after an expert economic council known as the Five Wise Ones reduced its forecasts for 2018 and 2019 in its annual report on the German economy.
The report, based on unfavourable external economic conditions and capacity bottlenecks, for example because of the shortage of skilled workers, predicted GDP growth of 1.6 per cent in 2018, slowing further to 1.5 per cent in 2019.
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