First-quarter GDP fall is biggest since records began in 1949

The French economy shrank by the fastest rate on record in the first quarter as measures to contain the coronavirus pandemic resulted in an unprecedented freeze in activity.
France’s gross domestic product dropped by 5.8 per cent in the first quarter compared with the previous quarter, according to preliminary estimates from the Office for National Statistics (Insee), the biggest fall since records began in 1949.
“GDP’s negative evolution in Q1 2020 is primarily linked to the shutdown of ‘non-essential’ activities in the context of the implementation of the lockdown since mid-March” said Insee. The drop was driven by an “unprecedented” 6.1 per cent contraction in household consumption and an 11.8 per cent fall in investment.
Exports and imports also contracted by about 6 per cent. Earlier this week Edouard Philippe, prime minister of France, announced plans to reopen parts of the economy from May 11 to avoid the risk of economic “collapse”.
Jessica Hinds, European economist at Capital Economics, said: “France’s Q1’s contraction will pale in comparison with the complete collapse that will surely be recorded in Q2. The sheer scale of the drop suggests that activity was reduced during the lockdown even more than we had thought.”
Ms Hinds said that was particularly ominous for the second quarter as the restrictions will be in place for almost half of the current quarter, compared with just two out of 13 weeks in the first quarter, and then lifted only gradually.
The eurozone’s second-largest economy had contracted by 0.1 per cent in the last quarter of 2019, which means the French economy has already entered a recession.
France’s output fall in the first quarter is larger than the 1.6 per cent fall recorded in the first quarter of 2009 during the global financial crisis.
The French figures came ahead of broader first-quarter data for the eurozone and a decision on monetary policy by the European Central Bank. Economists polled by Reuters forecast a 3.5 per cent contraction across the eurozone — the same fall that had been previously predicted for France.
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