According to Ifo's new main scenario, growth in Germany - Europe's largest economy - will therefore stop at 0.8 percent, followed by 1.2 percent growth in 2027.
If the main scenario holds and oil and gas prices moderate from today's elevated levels within a few weeks, Ifo expects German inflation this year to be 2.5 percent.
If, however, fossil fuel prices remain elevated for a longer period of time, inflation could rise to 3 percent, according to Ifo. German growth is then expected to be 0.6 percent this year, followed by 0.8 percent growth in 2027.
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