French economy could contract 20% in second quarter: INSEE

(C) Reuters. France softens lockdown rules during the outbreak of the coronavirus disease (COVID-19)

PARIS (Reuters) – France’s economy is on course to contract 20% in the second quarter from the previous three months as the country emerges from a nationwide coronavirus lockdown, the INSEE official statistics agency estimated on Wednesday.

That would mark a sharp deterioration in France’s recession after the euro zone’s second-biggest economy contracted 5.8% in the first quarter.

INSEE said the economy could contract 8% for the whole of 2020 in the unlikely scenario that activity returned to pre-crisis levels by July.

INSEE estimated that France’s economic activity was running at 21% below normal levels after the lockdown in place from mid-March was lifted on May 11. Activity was down 33% in early May.

Consumer spending was only 6% below normal levels since most stores were allowed to re-open after nearly two months, a sharp improvement from the 33% seen in early May.

A monthly survey from INSEE showed consumer confidence continued to weaken in May, falling to its lowest level since January 2019 when the country was in the grip of anti-government protests.

Households’ concerns about the general economy remained in May at levels unseen since the survey began in 1972, while unemployment fears were the highest since the global financial crisis in 2009.

Meanwhile, business confidence improved from record lows reached in April, but remained at deeply depressed levels, a separate monthly survey from INSEE showed.