France: Initial restrictions extended – growth forecast lowered

Hopes for a rapid containment of the Corona pandemic have not been fulfilled in France. The French government has recently decided to extend the strict exit restrictions for private individuals. The regulations in force since 17 March are now to remain in force until 11 May. Only if an improvement in the number of new infections becomes apparent by then, a certain relaxation should be considered.

The maintenance of the restrictive course will continue to have a slowing effect on economic activity. According to calculations by the French statistical office INSEE, one month of strict initial restrictions will lead to a 3 percentage point decline in annual gross domestic product. However, with the easing of the restrictions from mid-May onwards, there could then be some catch-up effects. Against this background, we now expect French GDP to fall by 5.2 percent this year. So far, our forecast was -4.0 percent.

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