Recession begins in France

US, WASHINGTON (ORDO NEWS) — So far, these are just estimates. According to the forecast of the Bank of France, the country’s GDP will lose 6% in the first quarter due to the coronavirus epidemic. “Only in the second quarter of 1968, against the backdrop of the May events, was the same strong quarterly decline in activity observed” (and now it is even stronger), the bank said. GDP then dipped by 5.3%, although then it grew by 0.8%.

No matter how accurate the numbers look like the current recession, which has become the worst since World War II, the recession in the French economy began as early as the first quarter. Moreover, GDP fell by 0.1% in the last three months of 2019.

So far, the Bank of France has refrained from the annual forecast. He does not confirm or disprove the recent statements of the Minister of Economy and Finance, Bruno Le Maire, who said in the Senate that, “apparently, everything will be much lower than -2.2%,” which corresponds to the first forecast for 2009 year (the first year after the financial crisis and the worst annual rate in France since 1945: the decline in activity was 2.9%).

75% decline in construction

“Every two weeks of self-isolation, they reduce annual GDP by almost 1.5%,” the Bank of France emphasizes. The experts also tried to assess the impact of coronavirus on various sectors of the economy, in particular, to calculate the extent of the decline in activity due to self-isolation measures. This analysis does not have the same accuracy as the usual forecasts of the Bank of France, but still “represents a useful order of magnitude.”

“As part of this industry-wide approach, the decline in activity for the week of restrictions is estimated at 32% across the economy,” they say in the Bank of France, presenting a list of the worst affected industries.

The most severe losses “relate to construction (a decline of three quarters of the usual level), trade, transport, the hotel and restaurant industries (two-thirds of the usual indicators)”.
Minus 50% in manufacturing

The manufacturing industry was also “seriously affected”: activity fell by almost half. In the field of trade services, everything is somewhat better: losses account for about a third.

“If you combine all these sectors, that is, processing industry, construction and non-financial market activity (a total of 55% of GDP), the decline is about half of the normal level,” the Bank of France experts emphasize.

The list of the least affected sectors includes agriculture, agriculture, oil refining, energy, non-market services, financial and real estate activities.

Germany’s GDP will decline by 4.2% this year

In Germany, the blow will not be as strong as in France. According to five major departments of the country, German GDP will lose 1.9% in the first quarter. The effects will be especially noticeable in spring: -9.8% of GDP.

In a good scenario, Germany’s GDP will decline by 4.2% at the end of the year, but then again show growth at 5.8% in 2021.

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