PARIS — The coronavirus crisis is weighing heavily on the French economy, which has entered a recession, with first quarter GDP down 6 percent, according to the governor of the Bank of France, François Villeroy de Galhau, on Wednesday.
The International Monetary Fund said earlier this week that the COVID-19 crisis was pushing the entire world into a recession, noting the economic pain was rising, along with the sharp rise in new infections from the virus. And the World Trade Organization on Wednesday predicted a 13 to 32 percent plunge in international trade.
“We project that trade in 2020 will fall steeply in every region of the world and across all sectors of the economy,” the WTO said.
According to the Bank of France update, a study of figures from the second half of March shows that economic activity slowed by around 32 percent as lockdown measures came into effect. The country’s statistics agency INSEE on March 26 had released an initial estimate of the decline in economic activity at around 35 percent. Speaking on French radio channel RTL, the governor said two weeks of confinement would weigh on annual GDP by around 1.5 percent. The governor’s assessment was more grim than previous estimates from the finance minister Bruno Le Maire. Last month, at an early stage of the crisis, Le Maire warned that the crisis could weigh on growth by 1 percent this year.
Villeroy de Galhau compared the economic situation to declines seen from civil unrest over half a century ago, during the May 1968 protests.
The official added that company executives polled by the institution expect the month of April to be at least as difficult as weeks in March.
“It’s a highly unusual period,” said Villeroy de Galhau, noting that the health-care crisis was the first priority, followed by the economic battle.
“It can’t last forever and we are all hoping to head toward a progressive lifting of the lockdown, but that, that will depend on what the public and health authorities will say,” he added.
France is betting on a range of government measures to keep workers employed as much as possible, drawing on lessons from Germany’s response to the 2008 crisis.
Evoking French President Emmanuel Macron’s “no matter what it costs today” pledge to fight the COVID-19 crisis, the governor relayed a sense of urgency in moving quickly.
“Today there is a consensus among economists in all countries and from all governments — which is quite rare — about what must be done: that is to say, provide a quasi unlimited amount of treasury to the maximum amount of companies, including small and medium-sized companies,” he said.
“France’s economic activity will be strongly negative in 2020, we know that already, but it should be positive in 2021, with a bounce back,” he said.
Philippe Waechter, an economist with Ostrum Asset Management, in a blog posting Wednesday predicted that the decline in GDP could be at least 10 to 15 percent.
“The confinement period has wiped out four years of growth,” he said.