Economic activity and household spending in France were both seen running at roughly 65% of the normal level amidst the coronavirus crisis, said the INSEE official statistics agency on Thursday.

INSEE published its monthly business confidence index, providing and initial idea of the effects of the nationwide lockdown. The index witnessed its sharpest monthly decline since records began in 1980. 

The index was down from 105 points to 95 points in February, with even bigger dips in the services and retail industries, INSEE noted. 

The French government has set up a €45 billion package, or 2% of its total gross domestic product (GDP), of crisis measures comprised mainly of deferred taxes and payroll charges for companies, and payments to firms who placed employees on reduced schedules. 

The government is also promising up to €300 billion, or 15% of GDP, of corporate borrowing from commercial lenders to maintain the credit flow to the economy. 

The statistics agency said it was too early to predict how serious the economic downturn would be, but said it estimates each month of lockdown to reduce economic activity by 12 percentage points quarter-on-quarter, and 3 percentage points annually. 

With major sectors of the economy in lockdown, the government forecast during an emergency update to the budget law last week that the economy would shrink by 1% in 2020, versus a 1.3% growth forecast in its previous estimates. 

Finance Minister Bruno Le Maire has since cautioned however, that the economic slowdown will likely be far worse, comparing it to the Great Depression of 1929. 

 

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