BERLIN (Reuters). BERLIN (Reuters). Persistent supply blockages and a fourth round of coronavirus infection in Germany is further stalling Europe’s recovery from the pandemic. This was stated Tuesday by the Ifo Institute, which lowered its forecast for growth next year.

Ifo projects that Germany’s economy will contract by 0.5% quarter over quarter over the remaining three months of the year, and then stagnate during the first three month of next year.

Ifo’s economic growth projection for 2022 was lowered to 3.7%, from the 5.1% forecast in September. The company raised its 2023 GDP growth projection to 2.9% from 1.5%.

Timo Wollmershaeuser of Ifo said that the ongoing supply bottlenecks as well as the fourth coronavirus outbreak are causing a noticeable slowdown in the German economy.

Wollmershaeuser said that the strong recovery originally expected to take place in 2022 would be further delayed.

Ifo has confirmed that its growth forecast for 2012 is already at 2.5%

Short-term inflation rates will rise, further reducing German consumer purchasing power due to low wages and weak wage growth.

Ifo anticipates that the National Consumer Price Index (CPI), will rise by 3.1% and 3.3% this year, respectively. These rates are clearly higher than the European Central Bank’s price stability goal of 2% in the Euro Zone.

Wollmershaeuser explained that the rising delivery costs and delayed adjustment to increased energy prices are driving factors.

Ifo anticipates that the inflation rate will normalize in 2023 and fall to 1.8% by then.