UPDATE 1-German economy to shrink by 2% in first quarter - government advisers

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BERLIN, March 17 (Reuters) - The German government's council of economic advisers said on Wednesday it expected Europe's largest economy to shrink by roughly 2% in the first quarter of this year due to lockdown measures to contain the COVID-19 pandemic.

The council cut its full-year 2021 gross domestic product growth forecast to 3.1% from 3.7% previously. It expects the economy to reach its pre-crisis level at the turn of the year 2021/22 and to grow by 4% next year.

"The biggest downside risk remains the development of the coronavirus pandemic. The question how quickly the economy can get to normal mainly hinges on the vaccination progress," the council said in a statement, giving the first official forecast for the impact in the first three months of the year.

Economists have warned that a decision by Germany and several other European countries to suspend AstraZeneca's COVID-19 vaccine could delay progress in reaching herd immunity and postpone a much hoped for easing of lockdown measures needed for a robust recovery in the second quarter. nL8N2LE2VA

The European Union's drug regulator is investigating the reports of blood clots, bleeding and low platelet counts and will report its findings on Thursday. AstraZeneca has said a review of safety data had shown no evidence of an increased risk of clots.

Council member Veronika Grimm said the AstraZeneca shot was needed to speed up Germany's already slow vaccination campaign.

In order for Germany to achieve the EU target of vaccinating 70% of the adult population by the end of September 2021, authorities must increase the number of daily shots given at vaccination centres by 50%, Grimm said.

To achieve this, the AstraZeneca vaccine is needed because it is easier to transport and store compared to shots which need unusually low temperatures along the delivery chain, she added.

"In addition, family doctors and specialists should be included in the vaccination process," Grimm said.

In a worst case scenario in which the AstraZeneca shot was banned permanently, it could be replaced in the government's vaccination plan only partially in the course of the year when other vaccines such as Johnson & Johnson's JNJ.N vaccine should become available, Grimm said.

(Reporting by Michael Nienaber, Editing by Kirsti Knolle and Alison Williams)

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