French lockdown slashes economic activity by 35%
City workers spray disinfectant products in the street of the French Riviera city of Nice on March 26, 2020. AFP
Business closures and self-confinement imposed by French authorities to limit the coronavirus threat has cut economic activity by about 35 percent overall, statistics office Insee said Thursday, in its first attempt to gauge the financial impact of the crisis.
The lockdown in place since March 17 is widely expected to be extended into April, and the government has pledged 45 billion euros ($49 billion) in loan guarantees and other relief for firms.
Insee said a one-month lockdown could slash annual gross domestic product by three percentage points, but cautioned that it lacked sufficient data to provide a firm estimate on French economic growth in the coming months.
The government has already said it expects GDP to contract one percent this year, abandoning the 1.3 percent growth target of just a few weeks ago, along with a huge jump in the budget deficit. Services, heavy industry and construction are all taking big hits, Insee said, as factories are shut down and only essential businesses like supermarkets or pharmacies remain open.
A wave of French blue-chip companies has abandoned their profitability targets for the year, while employers' associations have warned that hundreds of smaller firms and shops risk bankruptcy.
The estimated 35 percent reduction in normal economic activity "appears in line with preliminary data available on employee situations, with one-third still working as normal, one-third working from home, and one-third unemployed," Insee said.