There are graphics that speak more clearly than any text. The one published Thursday by Statista on the evolution of gross domestic product (GDP) in France is one of them. It simply shows the evolution of the wealth created in France over the past sixty years before concluding with the IMF (International Monetary Fund) forecast for 2020: -12.5%.
The magnitude of the looming economic crisis is striking. And it is also unprecedented, given the evolution of GDP since 1960.
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You can find more infographics on Statista-
“All the assets to emerge stronger from the crisis”
It is indeed one of the worst recessions in the world that awaits the French economy in 2020, according to the IMF. French GDP is expected to fall beyond what the government plans, which expects a figure of -11%. In either case, it will be a crisis unrivaled since the Second World War.
In France as elsewhere, “the recovery should be more gradual than expected,” said the IMF, while highlighting the uncertainty surrounding its new forecasts. In question: the physical distancing measures that will persist in the second half and the negative impact of health precautionary measures on productivity in companies.
“I maintain our growth forecast for 2020 at -11%,” said Minister of Economy Bruno Le Maire in a reaction sent to AFP. The measures to support the economy (partial unemployment scheme, deferral of charges, solidarity funds, sectoral plans, etc.) and “the recovery plan in preparation will support our businesses during the crisis and allow a rebound in 2021”, he added, stressing that France had “all the assets to emerge stronger from the crisis”.
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7.3% rebound expected in 2021
Today, the situation has already improved significantly in the industry where plant closings are now rare, and in construction, where construction has resumed. However, it remains more contrasted in services, where certain sectors have just resumed their activity, such as catering, cinemas or sports halls.
The future of the recovery will depend in particular on the impact and duration of health protocols in businesses, consumption and investment behavior of households and businesses, as well as the international context, according to INSEE, which does has not released an annual forecast of the extent of the recession.
The recovery in household consumption will be particularly decisive since the health crisis has mainly caused demand to stop. During confinement, in France, as elsewhere, households mainly purchased basic necessities (food and hygiene), abandoning clothing, furniture or vehicles.
In general, worldwide, “consumption should gradually increase next year”, as will investment which should, however, “remain moderate”, predicts the IMF. Under these conditions, the institution anticipates for France a rebound in growth of 7.3% in 2021 (a figure close to that expected by the Banque de France). It would then be one of the strongest growth among developed countries, ahead of the United States (+ 4.5%), Germany (+ 5.4%) or Italy (+6, 3%) and Spain (+ 6.3%).
Exit the “V” scenario
But all will not be resolved next year: “This strong apparent rebound would not allow to find the level of activity at the end of 2019 before mid-2022”, has already warned the French central bank.
Exit therefore, the “V” scenario that some people were still hoping for in February. Rather, it is a U-shaped scenario that is emerging at the global level in the best of cases, with several months of recession before the economy recovers. Even a “W” with alternating rebounds and relapses. Or, worse yet, an “L” with depressed activity for a very long time.
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