Think tank forecasts Germany's GDP to grow by 1.8 percent in 2016

German economic research institute Ifo Institute announced on Thursday it would upwardly revise its growth forecast of Germany's GDP to 1.8 percent for this year, instead of a previous forecast of 1.6 percent.

Meanwhile, the Munich-based think tank forecasts the German economy to grow by 1.6 percent in 2017.

"The first quarter of 2016 was better than expected. The moderate upturn in the German economy that started in 2014 is entering the second half. It may even run into extra time," said Timo Wollmershaeuser, interim director of the Ifo Center for Business Cycle Analysis and Surveys.

According to Wollmershaeuser, Germany's unemployment rate will fall to 6.1 percent in 2016 and stabilize at the same level in 2017, down from 6.4 percent in 2015.

Ifo's report forecasts the number of employed people will increase to 43.6 million in 2016 and 43.9 million in 2017 from 43.1 million in 2015.

The German federal government's budget surplus is forecast to drop from 19.6 billion euros in 2015 to 10.6 billion this year and will remain at that level in 2017.

Wollmershaeuser stated the inflation rate would increase from 0.3 percent in 2015 to 0.5 percent in 2016 and 1.5 percent in 2017.

In addition, German exports is forecast to grow by only around 2.9 percent this year, but will increase by 4.1 percent in 2017.

Ifo is one of Europe's leading research institutes. Its business climate index is considered among the most important barometers for the German economy.(1 euro = 1.12 U.S. dollars) Endit