Central bank sees French GDP down 9-10% in 2020

France’s central bank said Monday, November 9, it expects economic activity to decline between 9% and 10% this year, a bigger drop than previously forecast due to a new lockdown.

While the new confinement measures will deepen the recession, the Banque de France believes that they will be far less destructive than during the country’s first confinement earlier this year.

“Before the second wave, we thought the recession would be a little less than 9%, we think today that for 2020 as a whole it will be between 9% and 10%,” Banque de France chief Francois Villeroy de Galhau said on RTL.

The central bank had forecast in September that economic activity, or gross domestic product (GDP), would decline by 8.7% this year.

But that was before the rapid rise in COVID-19 cases in France in October, which led the government to impose a second lockdown.

The bank estimated that the new lockdown will cost the nation’s economy 12% of GDP compared to a normal week in November.

The Banque de France said economic activity was running 4% below pre-pandemic levels before the new lockdown was imposed at the end of October.

Restaurants, non-food retail, and recreation activities are being hit the worst by the new restrictions which shut or tightly restricted their activities.

But the lockdown is somewhat less restrictive than the first with more businesses allowed to operate, and the 12% drop in November activity pales in comparison with 31% registered in April.

“We’ve learned together how to work while protecting workers,” said Villeroy de Galhau.

He noted that construction activity is continuing and public services remain open during this lockdown, while more companies have figured out how to continue operations using remote working. – Rappler.com