The pandemic's grip on Germany has prompted the influential ifo institute to lower its 2021 growth estimate for Europe's biggest economy to 4.2 percent.
The Munich-based economists' previous forecast had been 5.1 percent.
"Recent shutdowns in Germany and other countries are pushing the recovery back. Production of goods and services won't reach pre-crisis levels until the end of 2021," ifo head of forecasts Timo Wollmershaeuser said on Wednesday, the same day that Germany entered a weeks-long lockdown in a bid to curb infections.
"The current year is likely to end with a further decline in gross domestic product as a result of the shutdown," he added in a statement.
The ifo expects the German economy to shrink by 5.1 percent this year, a slight improvement on the earlier estimate of 5.2 percent.
This outlook is based on the assumption that measures in place since November will remain in force until March 2021, the statement said, adding that it expects them to be "gradually relaxed as of April and completely abolished by the summer."
Germany closed all but essential shops from Wednesday in a tightening of the lockdown, but the revised ifo forecasts did not take into account this recent development.
Restaurants, bars, and cultural and leisure facilities were shuttered from early November and gatherings limited to five people from a maximum of two households.
In downgrading its forecast for next year, the ifo improved its outlook for 2022, when the German economy is expected to rebound by a further 2.5 percent, rather than a previously forecast 1.7 percent.
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