French GDP dropped at the fastest rate in history, contracting 14% in the second quarter — the latest European economy to reveal its pandemic pain
- France posted a nearly 14% decline in output, a third consecutive quarterly drop for the economy, and the worst three month fall in history, according to data released Friday.
- Although things were expected to be worse as economists predicted a decline of 15.2%, the second-quarter figures reflect the painful economic state that the COVID-19 outbreak left France in.
- France's "negative developments in the first half of 2020 is linked to the shut-down of 'non-essential' activities in the context of the implementation of the lockdown between mid-March and the beginning of May," the country's statistics agency said.
- In other parts of Europe, Germany posted a sharp GDP drop of 10% for the same period while Spain shrank by a historic 18.5%.
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The French economy reported its worst quarterly decline in history by shrinking 13.8% in the second quarter of 2020, data released by the country's national statistics bureau showed on Friday.
This was the third consecutive decline for France, with output falling 19% from the same period last year, and showed just how badly the pandemic has hit one of Europe's biggest powers.
France's economic downturn, somewhat surprisingly, isn't as bad as economists' prediction of a 15.2% decline, but it is still the sharpest drop since records began over 70 years ago.
The worsening state of affairs is "linked to the shut-down of 'non-essential' activities in the context of the implementation of the lockdown between mid-March and the beginning of May," statistics authority INSEE said in a statement.
Even though a gradual recovery was experienced in May and June, GDP contracted sharply in the quarter, with declines in total production, trade, investment, and consumption.
French exports suffered worse declines compared to imports falling 25.5% and 17.3%, respectively.
In June, INSEE predicted a 17% contraction for France's second-quarter, revising estimates from a prior forecast of 20%.
French finance minister Bruno Le Maire cut the government's annual GDP forecast to -11% from -8% after realizing the broader picture had perhaps worsened.
But considering a flurry of revision to estimates, the annual prediction too may be prone to further re-evaluations.
Although second-quarter numbers were not as bad as expected, Le Maire tweeted that efforts must be redoubled to revive economic activity in France.
This month, the European Union introduced an $860 billion recovery fund aimed at the reconstruction of the economic bloc after reaching a compromise with the so-called "Frugal Four" nations.
Stark data from the eurozone shows economic pain is likely to last awhile and a rebound to pre-virus levels looks like an uphill task.
Germany, Europe's largest economy, shrank 10% in the second quarter — its worst decline since records began in 1970. Spain too posted a historic GDP drop — of 18.5% — for the same period.