global economy

French economy set to bounce back as lockdown lifted

Agence France-Presse

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French economy set to bounce back as lockdown lifted

People wearing face masks shop at a market in Paris, France, on August 27, 2020. - France's prime minister on August 27 announced face masks will become compulsory throughout Paris, expressing concern over an "undeniable" trend of expanding coronavirus infection in the country. Jean Castex said 19 more departments have been added to a map with "red" zones of active virus circulation, meaning 21 of France's 94 departments are classified as such. Official figures released on August 26 showed more than 5,400 confirmed new cases in just 24 hours, with admissions to hospital and intensive care units on the rise. (Photo by Ludovic MARIN / AFP)


France's gross domestic product is forecast to grow 17% in the 3rd quarter of 2020, but a 9% contraction is still expected for the year as a whole

France’s economy, pushed into a bruising recession by the coronavirus crisis, is poised to bounce back now that lockdown measures are lifted but will still contract over the year as a whole, official data showed on Tuesday, September 8.

France’s gross domestic product, which shrunk by a record 13.8% in the 2nd quarter, is forecast to grow 17% in the subsequent 3 months, the national statistics office Insee calculated. 

But the projected rebound is not quite as strong as expected, and Insee said it was sticking to its forecast for an overall economic contraction of 9% for the year as a whole, while unemployment is projected to rise.

Although the easing of lockdown measures “has enabled a relatively rapid rebound in parts of economic activity,” the economy is returning after the summer break “rather like an engine that is being cranked up and choked off at the same time,” Insee said.

“The choking off is being done by the health situation and the virus that is still actively circulating,” Julien Pouget, head of Insee’s macroeconomic division, told Agence France-Presse.

“But it’s being cranked up by economic policies put into place with massive emergency aid and the recovery plan.”

Insee pointed to the risk of a “significant shock to demand,” with consumer spending and household confidence expected to remain below pre-crisis levels. 

As a result, the economic rebound will be “less rapid” between now and the end of the year, the agency predicted.

Pouget said that many companies had now returned to their usual level of business.

“But the toughest challenges remain for the badly affected sectors because they are suffering from the health crisis,” he said.

The transport, hospitality, and events sectors continued to struggle, he added.

The French government is officially still penciling in a contraction of 11% in 2020, but Finance Minister Bruno Le Maire has hinted that officials were preparing to release a less pessimistic number this month.

Unemployment is likely to rise to 9.5% by the end of the year, Insee said, 1.4 percentage points more than at the end of 2019.

Some 715,000 French jobs were destroyed in the 1st half of the year alone, it said. –

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