The 30-year-old Serb was forced to retire from his Wimbledon quarter-final against Tomas Berdych earlier this month because of the problem, and will now sit out of next month’s US Open.
In a live Facebook video post from Belgrade, the former world number one said that after suffering from the injury for a year-and-a-half, he had “made a decision to not play any competition, any tournaments” for the rest of 2017.
“Unfortunately this is the decision that had to be made at this moment. Wimbledon was probably the toughest tournament for me in terms of feeling the pain that has escalated,” he said.
Between mid-January 2015 and June 2016, Djokovic won 17 of his 22 finals played in 24 tournaments. It seemed nothing could interrupt his dominance of world tennis.
But for months the Serbian national hero — now fourth in the world rankings — has been a shadow of his former self.
Former world number one Novak Djokovic has slipped to fourth in the world rankings
Since winning the French Open last year to complete the career Grand Slam, he has failed to claim another major title.
He crashed out of the Australian Open in the second round and the French Open in the last eight.
Djokovic said that, having spoken to various medical specialists, “they all agree that I need rest, that I need time”.
“This is one of those injuries when nothing can really help instantly, you just have to allow natural rehabilitation to take its course,” he went on.
“And professionally this is obviously not an easy decision for me, but I’m trying to look from the positive side of everything.”
The decision means he will also miss the semi-final of the Davis Cup in France in mid-September.
He said he would need a couple of months without the racket but that surgery was “not an option”.
With Andre Agassi continuing as his coach while he recovers, Djokovic now intends to be ready to start the new season at the beginning of 2018.
That would mean he could compete in January’s Australian Open, his favourite tournament and one where he is the joint most successful male player with the legendary Roy Emerson on six titles.
“I will take this time to heal, to do all the different suggested methods of rehabilitation or healing processes so I can get back on the court asap.”
Djokovic’s long-time rivals and fellow tennis greats Roger Federer and Rafael Nadal have also taken lenthy spells out of the sport to recover from injuries over the last two years, and both returned to win Grand Slam titles this season.
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