BERLIN (Reuters) – Germany’s economic recovery from the COVID-19 crisis is at full swing, and the outlook for the industry remains positive despite supply bottlenecks for intermediate products, the German Economy Ministry said on Wednesday.

“The supply bottlenecks for intermediate products … have a dampening effect, however they do not impair the positive underlying dynamic of the overall economy,” the ministry said in its monthly report.

The ministry said it expects inflation to reach 3% or more in the second half of 2021 due to a base effect from a temporary VAT cut last year that was part of the government’s stimulus program to help the economy recover from the coronavirus shock.

Inflation will ease significantly in 2022, it added.

(Reporting by Riham Alkousaa; Editing by Maria Sheahan)

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