The eight weeks of confinement have lost 120 billion euros to French activity, announced the French Observatory of Economic Conditions, in a study published Monday, adding that "forced savings", it will reach 55 billion euros.
"During the confinement period, the gross domestic product (GDP) is reduced by 32%", corresponding to five points of GDP over the whole of 2020, specifies the OFCE. "Almost 60% of the drop in national income is absorbed by public administrations" through the increase in the deficit, while "35% is on the account of businesses, which raises the question of the rebound after the episode of confinement" , according to this study.
Will the French spend what they have saved?
The resumption of activity will depend very much on the resumption of consumption, namely to what extent the French will spend what they have saved during confinement or will build up precautionary savings. For the OFCE, "the contribution of eight weeks of confinement to the evolution of the public deficit would be 2.8 points of GDP, or 65 billion euros", but if all of this savings were consumed, this would not would be only 20 billion euros, or 0.9 point of GDP.
In this case, the annual loss of activity would be reduced to 2 points of national income instead of 5. But faced with the uncertainties about the end of the crisis, "the accumulated savings may not be consumed completely and quickly", notes l 'study. Especially since "households would see their income reduced by 9 billion euros" during confinement.
The public deficit equal to 9% of GDP
Also, "the restrictions that persist, particularly on the movement of people, could have massive sectoral impacts" and there could be "costly adjustments in unemployment", still estimates the OFCE. Finally, "the eight weeks of confinement would lead to a reduction in the corporate margin rate of 2.9 points of added value over the year, equivalent to a loss of 35 billion euros".
The government estimates that the GDP of France will decline over the whole of 2020 by 8% under the effect of the economic shock caused by the coronavirus, which will not be limited to the eight weeks of confinement. It also forecasts a surge in the public deficit to 9% of GDP for this year.
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