The German economy is likely to shrink by 6.6% this year as a consequence of the coronavirus crisis before growing by 10.2% in 2021, the Ifo Institute said today in its latest update. 

On average, German businesses expected operations to return to normal in nine months after severe lockdowns in the second quarter, Ifo said. 

Under this scenario, the economy would shrink 12.4% in the second quarter of this year. 

A slew of recent surveys suggests Europe's largest economy is slowly recovering after economic life was frozen in late March to contain the coronavirus pandemic, but the latest data underlines the unprecedented impact. 

Under a worst-case scenario in which a return to normal took 16 months, the economy would shrink 9.3% this year and grow 9.5% the next. 

The most benign scenario had companies recovering in five months, with the economy shrinking by just 3.9% and growing 7.4% next year. 

All three scenarios, based on business sentiment as well as production, turnover and foreign trade data, assumed a gradual relaxation of restrictions from the end of April. 

Some businesses were braced for a longer, more painful recovery, however, in particular the aviation sector expected normalisation to take 16 months. 

The travel, hospitality and carmaking sectors also expected lengthier recovery periods.