PARIS – France’s economy, which is the second-largest in the Eurozone, right next to that of Germany, is on course to contract 20% in the second quarter from the previous three months as the country emerges from a nationwide coronavirus lockdown, the INSEE official statistics agency estimated on Wednesday.
It would mark a sharp deterioration in France’s recession after the European Union’s second-biggest economy contracted 5.8% in the first quarter, FRANCE24 reported. INSEE announced that the economy of France could contract 8% for the whole of 2020 in the very unlikely scenario that the economic activity returned to pre-crisis levels by July.
INSEE estimated that economic activity in the major EU power was running at 21% below normal levels after the lockdown in place from mid-March was lifted on May 11. The economic activity was down 33% in early May. Consumer spending was only 6% below normal levels since most stores were allowed to re-open after nearly two months, a sharp improvement from the 33% seen in early May.
A monthly survey from INSEE showed French consumer confidence continued to weaken in early May, falling to its lowest level since January 2019 when virtually the whole country was in the firm grip of anti-government protests, popularly knows as the “Yellow vests movement”.
Households’ concerns about the general economy remained in May at levels unseen since the survey began in 1972, while unemployment fears were the highest since the global financial crisis of 2009. Meanwhile, business confidence improved from record lows reached in April, but remained at deeply depressed levels, a separate monthly survey from INSEE showed.