ONE OF THE MOST AFFECTED FRENCH ECONOMY

BY THE CORONAVIRUS CRISIS

The government further exacerbated its forecast for recession this week, with a historic gross domestic product (GDP) drop of 11%.

In addition, according to a note from the French Observatory of Economic Conditions (OFCE), an independent research organization, published on Friday June 5, 2020, the French economy was undoubtedly one of the most affected by the health crisis.

According to this note, which studies the impact of Covid-19 on the month of April, when many countries confined their populations, the world economy experienced a recession of 19% that month, while trade global fell 25%.

“We can classify countries in the world in three categories. We have the countries of southern Europe, the other developed countries and the countries of the rest of the world and the Asian countries. In the first category, there are France, Italy and Spain. These are the countries that have been the most impacted ”, analyzes Eric Heyer, economist and deputy director of the OFCE, with a fall in their added value“ by more than 30 points ”.

Very bereaved, these three countries have in particular implemented strict confinement for more or less two months, with in particular the closure of non-essential businesses. In France, the deconfinement is done gradually since May 11.

Germany resists better

Conversely, the United States (-22 points) or Germany (-24 points) are doing a little less badly, while the emerging economies are more resilient at this stage (-15 points). As far as Asian and developing countries are concerned, "we see both a much smaller drop in consumption and investment, and then overall less integration in the production chains, thus an external impact which has much less of weight ”, according to the survey.

But this ranking is "extremely fragile" given the unprecedented nature of this crisis, warned Eric Heyer, director of the analysis and forecasting department at the OFCE during a press conference call.

These differences are explained both by the extent of the containment measures taken, which are slightly less across the Rhine and across the Atlantic, but also by the "sectoral structure" of the economies. Thus, Germany experienced an "extremely contained" internal shock but a much greater loss of external demand due to its industrial and open economy. France, for its part, is the victim of its exposure to tourism, with hotel and restaurant and trade sectors much larger than elsewhere. Jobs: France has limited the damage

Impact on employment

One of the great unknowns of this crisis will be its extent on employment, notes at this stage the OFCE, with "three issues", according to Xavier Timbeau, its director: the risks of business bankruptcies, the prolonged difficulties for certain sectors such as tourism and catering, and a too weak recovery in household consumption.

So far, however, the crisis has resulted in “relatively limited” job destruction due to massive public support for short-time working, with the exception of the United States, where job destruction could affect 22, 4 million jobs, and to a lesser extent from Germany where many “minijobs” have been cut.

France, where the state took charge of 100% of partial unemployment, or 84% of net wages or 100% of the minimum wage, for two months, and Italy would be the most spared with only 3% of salaried jobs hit by crisis.