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French Economy Suffered Less From Lockdown Than Expected

French Economy Suffered Less From Lockdown Than Expected

(Bloomberg) -- The French economy suffered less than initially estimated in the lockdown and is also getting back toward normal levels of activity faster, according to national statistics agency Insee.

Consumer spending has rebounded quickly after shops reopened May 11 and has remained at levels close to normal, it said Wednesday. Insee, which has issued regular updates using high-frequency data, also said business services were less affected than predicted during the virus restrictions.

French Economy Suffered Less From Lockdown Than Expected

The brighter assessment indicates the longer-term damage to France’s economy may not be as severe as feared. That could mean businesses are more likely to remain viable and fewer jobs may be lost.

The consumer-activity pickup also offers hope to other countries as they allow more stores to reopen. It suggests households are starting to spend again after saving in recent months, which will help to drive demand.

“We have an economic recovery that seems very clear since mid-May, helped by all the measures put in place to support households and businesses,” Insee economist Julien Pouget said.

The statistics agency revised its estimates of lost activity in March and April to -16% and -29%, from -18% and -35% previously. In June, that may improve further to -12% from -22% in May.

It also cut its forecast for the contraction in GDP this quarter to 17% from 20%.

Still, Pouget noted that there is exceptionally high uncertainty in the current situation. Some industries have been hit much harder than others and it’s unclear how social distancing rules will affect activity and how business investment behavior could change in the longer term.

The French government is also cautious about the rest of the year.

“I don’t believe in a V-shaped recovery in France, Europe or anywhere in the world,” Finance Minister Bruno Le Maire said at a hearing at the National Assembly earlier Wednesday. “The international situation has deteriorated too much, the epidemic is restarting in some towns in China, and the situation is weak in the U.S. and South America.”

©2020 Bloomberg L.P.