French economy bouncing back after Covid-19 lockdown measures lifted

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Issued on: 08/09/2020 – 11:02

France’s economy, which like those of other countries was pushed into a bruising recession by the coronavirus, will bounce back now that lockdown measures are lifted but will still contract over the year as a whole, official data showed Tuesday.

France’s gross domestic product, which had shrunk by a record 13.8 percent in the second quarter, is forecast to grow by 17 percent in the subsequent three months, the national statistics office Insee calculated.

Nevertheless, the rebound was not quite as strong as expected and Insee said it was sticking to its forecast for an overall economic contraction of 9.0 percent for the year as a whole.

French economic activity should run at 95 percent of pre-epidemic levels in the third quarter and at 96 percent of pre-outbreak levels in the fourth, INSEE said.

Economic activity ran at 81 percent of pre-outbreak levels in the second quarter, data showed.

If 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 at the same time,” Insee said.

While activity in key areas such as air transport and culture and entertainment continued to be throttled by the coronavirus restrictions, some sectors were still benefitting from the emergency economic measures put in place by the government, the statisticians said.

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.

(FRANCE 24 with AFP and REUTERS)

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