French Lockdown Slashes Economic Activity by 35%

PARIS (AFP) — Business closures and quarantines imposed by French authorities to limit the coronavirus has cut economic activity by about 35% overall, statistics office Insee said Thursday, in its first attempt to gauge the financial impact of the pandemic.

The lockdown in place since March 17 is expected to be extended into April, and the government has pledged $49 billion in loan guarantees and other relief for businesses.

Insee said a one-month lockdown could slash annual gross domestic product by 3%, but cautioned that it lacked sufficient data to provide a firm estimate on French economic growth in coming months.

The government has already said it expects GDP to contract by 1% this year, abandoning the 1.3% 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 have abandoned their profitability targets for the year, and employers’ associations have warned that hundreds of smaller firms and shops risk bankruptcy.

The estimated 35% 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.

© Agence France-Presse

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