French Economy Registers Record Output Decline Due to Coronavirus Lockdown — Update
France’s economy suffered its biggest contraction on record in the second quarter due to the lockdown enforced to limit the spread of the coronavirus between mid-March and the beginning of May.
The eurozone’s second-biggest economy contracted 13.8% during the second quarter, following a revised 5.9% decline in the first quarter, French statistics agency Insee said in a first estimate for the period. Economists polled by The Wall Street Journal had forecast a 15.4% second-quarter contraction.
On an annualized basis, the economy contracted by 19.0% in the second quarter, Insee said.
The breakdown showed that the collapse was broad-based, with declines in household spending, investment, exports and imports and government spending. This was marginally offset by a positive contribution from inventories.
“The outcome is less negative than might have been feared only a few months ago and this is mainly explained by a relatively less intense contraction in private consumption,” UniCredit’s economists said.
High-frequency data suggest that France’s economy has rebounded quicker than its neighbors’ since the lockdown ended in mid-May.
“Both our mobility tracker and the economic surveys have recovered faster in France than in other major euro-zone countries, which may in part reflect the sheer scale of government support, which has been very generous,” said Jessica Hinds, European economist at Capital Economics.
The French release was followed by the publication of the first estimate of second-quarter gross domestic product in Spain, where the economy plunged a record 18.5%. Italy will also publish GDP figures on Friday and is estimated to have suffered a decline similar to the one recorded in Spain. The two countries were the two worst-hit by the pandemic in Europe. First estimates for second-quarter GDP for the eurozone as a whole will also be released on Friday, with a sharp contraction also expected.
Source: Dow Jones