France Q2 GDP could fall by 20%, says stats agency
France’s economy could contract by 20% in the second quarter as it felt the impact of lockdown measures taken to stop the spread of the coronavirus, the INSEE official statistics agency said on Wednesday.
That figure compares with a first quarter fall of 5.8%. INSEE said there were signs of a rebound in consumer spending after lockdown measures were eased on May 11.
It added that the economy could see an 8% contraction in 2020 if activity returned to pre-Covid levels by July. Consumer spending was 6% below normal levels since most stores were allowed to re-open after nearly two months, from 33% reported in early May.
A monthly survey from INSEE showed consumer confidence continued to weaken in May, falling to its lowest level since January 2019.
The headline INSEE manufacturing confidence gauge to 70 from a sharply revised 68 in April, well below the consensus of 85.
The aggregate business sentiment gauge increased to 59 from from a significantly revised, 53 in April, but also below the consensus of 69.
Pantheon Macroeconomics chief Eurozone economist Claus Vistesen said the “grim” data were an indication of the overall halt in output as a result of the lockdown and not a sign of a deterioration in production conditions.
“We see evidence of this in the jump in firms’ own production outlook, to -12 from -69. Elsewhere, the new orders-to-inventory index shot higher, primarily thanks to a jump in firms reported inventories, while new orders fell only slightly.”
“Overall, the business sector in France remains under severe stress though to the extent that May marks the start of the “great reopening”, the INSEE data mainly covers the first part of the month, when lockdowns were still in effect.”
“Next month’s data should provide a much clearer picture of the speed with which confidence and business conditions are improving, and should look much better.