a month of confinement would cause French annual growth to lose 3 points of GDP

As we knew, the economic impact of the coronavirus epidemic promises to be massive. INSEE has just confirmed it: in a first estimate published this Thursday, national statisticians report that the loss of economic activity is currently estimated at “35% compared to a normal situation” In other words, compared to a week called “normal“,”the loss of “instant” activity is estimated at around a third“, A considerable shock to the economy, which leaves”65%»Of the activity turn normally. The losses are particularly strong in industry except agrifood (-52% of activity), construction (-89%) and market services (-36%). Agriculture and the food industry are not spared either, losing 4% of activity compared to normal.

The director of INSEE, who spoke in the preamble to the study, expressed his reservations about this estimate, for two reasons. First, the health emergency outweighs the economic aspect of the crisis. Then, “a statistician is reluctant to give a result for which he is not sufficiently assured“Writes Jean-Luc Tavernier. However, it is difficult to provide precise quantification in the current context: the estimate is therefore “brittleAnd will likely be revised in the future, as the situation changes daily.

In addition, household consumption has also collapsed, according to INSEE estimates based on feedback from the various federations. In total, the drop in consumption should amount to more than a third (-35%), and if the food industry is doing well, thanks to the massive purchases of confined citizens (+ 6% activity by compared to normal), this is not the case for many other sectors that stick out: “Some consumption expenses have been reduced to a minimum, between -100% and -90% (transport equipment, textiles, clothing)“, Reports INSEE.

See also – Daniel Cohen: “A well-designed fiscal policy would compensate” for the loss of GDP

This marked drop in consumption, which remains the French driver and was to protect France’s growth in 2020 compared to its European partners, should greatly reduce growth forecasts this year. The institute figures the drop in growth caused by a month of confinement at 3 points of annual GDP, a forecast that will double if the confinement is twice as long. The longer the duration, the more logically limited the prospects.

Business climate falls sharply in forty years

In addition, INSEE reports at the same time a record decline in the business climate, the strongest since the start of its measurement in 1980. It lost ten points in March 2020, more than during the crisis in 2008, when he fell 9 points. It now stands at 95 points, below its long-term average, and far behind the 105 points in February. In industry, “the balance of opinion of the industrialists on the general prospects of production of the sector collapses, by more than thirty points, and reaches its lowest level since mid-2013” In services, the fall in the synthetic indicator reached 14 points, returning to its level in March 2015. The loss amounted to 4 points for wholesale trade, 13 points for retail trade, and the climate remains stable for the building but with bad prospects for the coming months.

Synthetic indicator of the business climate Insee / Le Figaro

The synthetic indicator is also driving down the employment climate, which has recorded its sharpest decline since its creation in 1991. Here again, its decline in March, of nine points, is more important than its previous record of eight. points in 2008. This indicator returns to its level of five years ago, after several years of stagnation above its long-term average.

These main figures reflect the fears of the business world, reluctant to face the scale of the crisis and the uncertainty that surrounds the coming weeks. Alarmist estimates from INSEE confirm repeated warnings from the authorities: this week, the Minister of the Economy warned that the current crisis would be comparable to the collapse of 1929, adding that French activity would need “economic patriotism” To hold. “The crisis will be violent“, And the 45 billion euros planned by the State to respond to it will be only”starting pointAdded Bruno Le Maire. Furthermore, the real figure for growth in 2020 should be even less optimistic than the 1.1% decline noted in the amending finance law adopted a few days ago.


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