Berlin, Dec 15 (IANS): The ifo Institute, a research institution based in Munich, has lowered its 2022 economic growth forecast for Germany from the previous forecast of 5.1 to 3.7 per cent in 2022.

"A strong recovery will set in during the summer in the first half of 2022 when the Covid-19 wave subsides and supply bottlenecks gradually end," said Timo Wollmershaeuser, Head of economic research and forecasting at the institute on Tuesday.

"Overall economic production is likely to increase significantly in the second and third quarters of 2022 and slowly move toward average growth rates," Wollmershaeuser added.

The forecast for economic growth in Germany in 2023, on the other hand, was raised by 1.4 percentage points to 2.9 per cent. There was a "shift in economic momentum from next year to the year after," the ifo Institute noted.

In terms of inflation, the institute expects a further increase to 3.3 per cent in 2022 after 3.1 per cent in 2021. Consumer price inflation would not normalise until 2023, when it would fall back to 1.8 per cent, according to the Munich-based research institution.

According to the ifo forecast, the unemployment rate in Germany will fall steadily, from an annual average of 5.7 per cent in 2021 to 5.2 per cent in 2022 and 4.9 per cent in 2023, Xinhua news agency reported.

Germany's budget deficit was projected to fall by around half to 80 billion euros ($90.4 billion) in 2022. In 2023, the deficit would only amount to 20 billion euros, according to ifo. (1 euro = $1.13)