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France suffers record 13.8 per cent GDP fall after Q2 lockdown

France's gross domestic product plummeted by a record 13.8 per cent in the second quarter of 2020, national statistics agency INSEE said on Friday.

Paris, 31 July 2020 (dpa/MIA) – France’s gross domestic product plummeted by a record 13.8 per cent in the second quarter of 2020, national statistics agency INSEE said on Friday.

The April-June period covers most of France’s strict coronavirus lockdown, which ran from March 17 to May 11 and, at its peak, saw more than 12 million workers qualify for short-term lay-off payments.

The fall comes after a revised figure of a 5.9-per-cent drop in the first quarter, which was already a record since figures were first collected in 1949.

The figures were “severe,” but not as bad as expected, Economy Minister Bruno Le Maire said, citing previous estimates that second quarter GDP might fall as much as 17 per cent.

“It proves that we are not powerless faced with the crisis,” he told C-News television, arguing that the short-term layoff programme which maintained household incomes, and demand-boosting measures such as incentives to buy new cars, were bearing fruit.

GDP is now down 19 per cent in total on the same period last year, INSEE said.

It warned, however, that in this year’s exceptional circumstances the quarterly figures were more likely than usual to be revised later.

Household consumption was down 11 per cent, after a fall of 5.8 per cent in the first quarter.

Fixed capital formation shrank by 17.8 per cent, compared to a 10.3-per-cent drop in the first three months of the year.

French exports were down 25.5 per cent, after a 6.1-per-cent fall in the first quarter. Imports were not quite as badly affected, but still dropped sharply, down 17.3 per cent after a 5.5-per-cent drop in the first quarter.

The French figures come a day after Germany and the United States released second quarter GDP figures showing their economies contracting by 10.1 per cent and 32.9 per cent respectively.

France has been one of the European countries worst hit by the pandemic, with more than 30,000 deaths.

The government has forecast an annual GDP fall of 11 per cent this year, as well as a record 11.4-per-cent budget deficit.

Before Covid-19 struck, the country had planned to run a 2.2-per-cent deficit.

Le Maire said that President Emmanuel Macron’s government would “fight to do better than this minus 11 per cent” in GDP.

An economic restart plan worth 100 billion euros would be unveiled on August 25, after the government’s summer break, he said.

And he urged citizens to help out by spending money from household savings, which amassed rapidly during the lockdown, saying they were worth another 100 billion euros.

“The best way of coming out of this crisis is for the French people to spend money too,” Le Maire insisted, promising that there would be no tax increases.

The government would increase loan guarantees for the hotel and restaurant business, which have been among the hardest hit, from a maximum of 25 per cent of turnover to 80 per cent, he said.

The minister said that the most serious threat to economic recovery would still be “the return of the epidemic.”

“So we are all responsible if we want this economic recovery to succeed, [and] we have to be vigilant on health issues,” he said.

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