French Economy Is Weathering April Lockdown Better Than Last Year’s
(Bloomberg) -- The French economy is slowing only slightly in April due to the tightening of Covid-19 restrictions, easing concerns that school closures would cause a deeper contraction.
The Bank of France said activity will decline to 7% below pre-crisis levels in April after President Emmanuel Macron imposed stricter travel restrictions and ordered schools and nurseries to close. The hit to activity in March was 4%, better than previously estimated thanks improvements in services, industry and construction, according to the institution’s monthly survey.
French Finance Minister Bruno Le Maire warned the latest set of measures would dampen the economic rebound this year. Yet the central bank data add to evidence that European economies are proving more resilient than they were a year ago in the face of second and third-round lockdowns to control infections.
“We have collectively learned to work with the virus,” Bank of France Governor Francois Villeroy de Galhau said on France Culture radio on Tuesday. “In April, activity is declining less than we might have feared.”
Industry and construction are almost back to normal, with the exception of the auto and aircraft sectors, Villeroy said.
Greater use of remote working and better management of social distancing rules contributed to the less-severe dive, Chief Economist Olivier Garnier said. Fewer sectors have ceased operating versus a year ago, more stores remain open, and stronger global trade is supporting manufacturing, he also said.
The April survey of 8,500 businesses found that the sharpest declines in service sector activity are in sectors such as car repairs, equipment leasing, hotels and leisure.
Villeroy expects the economy posted slight growth in the first quarter. He added that the central bank is also not revising its forecast for 5.4% growth in 2021.
“That means the French economy will clearly grow more than the European average this year,” Villeroy said.
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