The reconfinement causes a relapse of the French economy, but less strong than in the spring

Published on : 17/11/2020 – 23:56

Not surprisingly, the restrictive measures linked to the Covid-19 epidemic are causing the French economy to relapse, but less strongly than in the spring. This is the observation of INSEE, which explains that this is due to a less strict confinement than the first.

INSEE anticipates a fall of 13% of GDP in November compared to the pre-crisis level. The 30% drop recorded in April is a good month. The reason is simple, re-containment is more flexible than that of spring and companies adapt better to health constraints.

Different sectors of the economy are affected unevenly. Industry and construction are much less slowed down than in the first wave, while sectors such as tourism or the hotel and catering industry have come to a halt.

December will be crucial

The month of December will be crucial for the economy as it is a period when consumption increases due to the holiday season. A confinement until the end of December would, without surprise, result in a greater fall in GDP which would then total for the whole of the fourth quarter, approximately 6% estimates the INSEE; but if the restrictions are lifted at the end of November, the contraction will only be 2.5%. As for the prospect of an economic recovery in 2021, it will depend above all on the future vaccine against Covid-19.

Household consumption should plunge 15% in November compared to the pre-crisis level, but here again it is two times less than in March-April. More businesses have remained open and distance and online sales have grown a lot, whereas they were “ at half-mast »At the end of March at the start of the first confinement, according to data from bank card transactions used by INSEE.

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