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Covid-19 : the magnitude of the air hole economic in France unveiled this Friday

We already know that the figure of the Insee will remain in its annals as an absolute record since the Institute began compiling this reference indicator in 194

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Covid-19 : the magnitude of the air hole economic in France unveiled this Friday

We already know that the figure of the Insee will remain in its annals as an absolute record since the Institute began compiling this reference indicator in 1949.

Insee will encrypt this Friday the extent of the staggering decline in activity in France in the second quarter, when the economy is growing but is facing a lack of confidence.

In its last forecast in mid-June, the national statistics Institute estimated the dip at 17% compared to the previous quarter, while the Bank of France was estimated at the beginning of July to 14% over the same period, and that the consensus of the analysts of the agency Factset is 15.3%. The main reason for this collapse : six weeks of confinement in April and may, after two in march which had already reduced the GDP of 5.3% in the first quarter.

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even today, "it is hard to gauge what exactly will the loss of activity because we are in a climate very unstable", explains Arno Fontaine, economist, France chez Natixis, which provides for a dip between 15% and 16%.

anyway, the figure of the Insee will remain in its annals as an absolute record since the Institute began compiling this reference indicator in 1949.

The two strongest quarterly declines in the GDP had previously been recorded in the first quarter of 2020 and the second quarter of 1968, which is assigned at the time by the general strike in may, but that had been followed by a rebound of +8% in the summer. The rise should this time be all the more vigorous that the downward spiral was abysmal : the Insee provides +19% for the third quarter, Natixis +16% and the Bank of France +14%.

"recovery dynamic"

Several indicators published last week reinforces the idea of a strong revival. Private sector activity has recovered sharply in July, especially in services, according to an indicator provisional published by the firm Markit. According to the consulting firm, BCG, France would experience the same "recovery is the most strong of Europe".

The Insee has also reported a renewed confidence in July, business leaders, who see good business prospects in most sectors.

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"In may and June, it is the consumer that has bounced off the activity, the investment is not at all", is his side Philippe Waechter, director of research at Ostrum Asset Management. "There is a component that bounces strongly, it is the consumption of households" is also Arno Fountain.

And yet, the moral of these same households, who had started to recover in June after the déconfinement, dipped again in July, reported Wednesday the Insee. And if the consumer has on the whole recovered well, the start of sales was "little momentum", noted the federation Procos of the specialized trade.

As a result, the share of French considers that it is appropriate to save increases for the third consecutive month, according to the Insee, and then the mobilisation of 100 billion euros of savings planned this year will play a decisive role in the recovery.

Problems side jobs

Side business, "there are greater difficulties, of course, for the investment", because they "have acquired a lot of debt during the confinement period," notes Arno Fountain.

"The companies have levels of activity that are very low and the uncertainty is very strong, they have no desire to invest", also notes Waechter. "This is the key element of the next month, and associated with this, their behavior on the job," emphasizes the economist.

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"I continue to believe that the worst is ahead of us" in terms of jobs and bankruptcy, said Tuesday the Economy minister Bruno Le Maire said before the economic Affairs commission of the national Assembly. Therefore, the government, he refused for the moment to revise its forecast of GDP decline for the year 2020, that figure is at 11%, while the Insee is expected to 9 percent.

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the situation on The job front looks particularly complicated with the arrival of 700 000 young people on the labour market re-entry, and a risk of multiplication of bankruptcies and social plans with the arrest of a number of aid measures, including the partial unemployment for most of the sectors.

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