France : a fall in GDP of “less than 8%,” this year, more if it lasts

France : une chute du PIB d’ « au moins 8 % » cette année, plus si ça dure

PARIS | The crisis due to the coronavirus should bring down the French GDP, of ” at least 8 % this year according to the duration of the déconfinement until the full recovery, says the governor of the Bank of France, François Villeroy de Galhau.

The current crisis “is totally unique in its nature, and more violent than previous crises,” said the governor in an interview with the Sunday Newspaper.

“France should know by 2020 a fall of GDP of at least 8 % “, he says. The government table currently on -8 %.

“Every fortnight of confinement leads to a decrease in the annual growth of about 1.5 percentage point, and almost as much in deficit, further fiscal “, he recalls.

For all that, “we will (…) not a shot at a normal recovery” with the déconfinement from the 11th of may, anticipates-t-it : “This will be an act II, where it will grow at the same time the trust health and economic confidence, for contractors as for employees. ”

“We do not yet know the duration of act II until the full recovery “, said Mr. Villeroy de Galhau.

For him, the State ” plays the role of shock absorber maggiore “, facing the crisis : “The massive public has absorbed at least two-thirds of the shock and reduces the impact to households and businesses “.

“Its role as a protector is expected to decrease as the recovery in the various sectors,” he predicts, ” as well as, of course, this shock to the collective will have to be paid in the future “.

“France will come out of this shock with a public debt increased by at least 15 percentage points of GDP to 115 %. In the long term, it will be necessary to pay this money back, ” insisted the governor.

“You need to aim for a more effective management, especially as the French do not want to pay more taxes “, he warns.

In the meantime, “it is too early to (…) say,” if the 110 billion mobilized by the State to support the economy will be sufficient.

A revival of consumer spending is possible, given that many French spend less than what they earn with the containment. This difference “should be in the future tank purchases, and therefore of growth” for little that they are “reassured about the health plan,” according to him.

“We have to be careful, but the IMF predicts that France could return next year (in 2021) a strong growth of + 4.5 per cent “, he noted.

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