France is undergoing a historic recession because of the coronavirus

La France subit une récession historique à cause du coronavirus

PARIS | France has known in the spring the strongest decline in activity since at least 1949, with a dip in the gross domestic product (GDP) of 13.8% in the second quarter, reported on Friday the Insee.

Since it measures the economic activity of French quarterly, never to the national statistics Institute had recorded such a collapse.

It has also revised its measure of activity in the first quarter, which fell to 5.9 %, instead of 5.3 % reported previously.

The fall in GDP in the second quarter, however, is less than that anticipated most of the analysts and the Insee itself, which is projected again to 17 % in the month of June.

But “this first estimate is still fragile and it is likely to be revised, more than usual, in the next publications of the quarterly accounts”, warns in its press release the institute, which does not publish a new forecast for the whole year after a recession of 9 % made at the beginning of July.

In detail, the household consumption, the main component of growth, fell by 11 %, the production of goods of goods and services has shrunk from 14.2 %, with a dip still in manufacturing industry, 16.8 %.

The investment tumbled by 17.8 %, exports of 25.5 %, while imports declined by 17.3 % in the quarter.

Only the food resists, with a slight decrease of 0.5%, and market services limited case, with a decrease of 6.2 %.

But “with regard to services, the expenses of transport services (-45,8 %) and accommodation-food (-56,9 %) collapse, in connection with the administrative restrictions have been implemented to combat the pandemic,” still reports the Insee.

In a general way, “the negative development of the GDP in the first half of 2020 is related to the stopping of activities +non-essential+ in the context of containment put in place between mid-march and early may,” says the institute.

“The gradual lifting of restrictions led to a gradual recovery in economic activity in the months of may and June, after the low point reached in April,” he continued.

The highest quarterly decline of GDP before the crisis of the sars coronavirus was recorded in the second quarter of 1968, affected by the general strike in may, but that had been followed by a rebound of +8 % in the summer.

Signals mixed

The rise should this time be all the more vigorous that the downward spiral was abysmal: the Insee is expected to +19 % for the third quarter, Natixis +16 % and the Bank of France +14 %.

Several indicators released last week confirm that a dynamic rebound of the French economy, as the recovery in activity in July, as measured by the firm Markit or the renewed confidence of business leaders.

But the morale of households, which had started to recover in June after the déconfinement, dipped again in July, reported Wednesday the Insee.

And if the consumer has on the whole recovered well, the start of sales was “not very dynamic”, according to the federation Procos of the specialized trade.

As a result, the share of French considers that it is appropriate to save increases for the third consecutive month, while the mobilisation of 100 billion euros (159 billion dollars) in savings planned this year will play a decisive role in the recovery.

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