Germany's economy will grow by 0.6% this year before regaining momentum and growing by 1.9% next year, the Ifo institute said today.
In December Ifo had forecast growth of 0.7% for this year but it still remains more optimistic than the government and the Bundesbank, which respectively expect growth of 0.5% and 0.3% in 2013.
Earlier this week the institute's closely-watched business sentiment survey showed morale edging up for a second consecutive month in June, though a fragile global backdrop suggested the mood could darken.
The German economy eked out 0.1% growth in the first quarter on the back of private consumption, only narrowly avoiding a recession after it contracted in late 2012.
Meanwhile, a survey has found that low unemployment and solid wage increases have helped push German consumer confidence to a nearly six-year high.
The GfK research institute said today that its forward-looking consumer climate index rose to 6.8 points for July from 6.5 in June. That is the highest level since a reading of 7.3 in September 2007.
Germany's unemployment rate was 6.8% in May, in contrast to rates of over 20% in the European countries worst-hit by the debt crisis.
Industrial workers and others in the country, which has Europe's biggest economy, have secured wage raises well above the inflation rate this year.
