France affirms its economy will still be hard hit by a massive economic slowdown despite one of Europe's strictest lockdowns to tame the spread of COVID-19. Its economy is projected to lose 11% in economic growth this year compared to the previously predicted 8%. Despite this grim news, the hardest times are still ahead for France, however.
These stunning admissions were made Tuesday by Finance Minister Bruno Le Maire. Le Maire also said economically and socially, the hardest times are ahead of France because the shock of the crisis was extremely violent.
France's national statistics agency INSEE (Institut national de la statistique et des études économiques), had warned of this dramatic reduction in economic growth as early as last week, however. It said the economic contraction will be much larger than the government's previous an estimate of 8% because the ill-effects of the lockdown will be palpable only by the second half of the year.
Le Maire said the French economy practically ground to a halt for three months because the government took effective measures to protect the health of the French people. He admitted the economy is going to pay for the government prioritizing the health of its citizens with a slowdown in growth.
"Even if it is hard to hear on a day when the sun is shining and the cafes are reopening, the hardest part is still ahead of us in social and economic terms" said Le Maire.
To avert more economic damage, France will go-ahead with tax-cut plans and proceed with a deep overhaul of its economy to quicken its recovery from an economic recession that will be deeper than expected. Le Maire said France needs to remain true to its goal of reducing taxes for households and giving businesses the capability to digitize, robotize, and innovate.
He is, however, absolutely certain France is going to bounce back in 2021. In September, Le Maire will unveil another stimulus plan he says will cut the high taxes French companies pay based on production.
He said the government has its hands full trying to prevent more retail bankruptcies. One option available to the government of French President Emmanuel Macron is to find buyers for hard-hit retail giants Camaieu, Conforama, and La Halle, which employ thousands of people.
Le Maire previously revealed sector-specific support plans for the tourism and motor vehicle industries. He said measures to prop-up the aerospace industry are being prepared and will be revealed next week. Measures to protect start-ups and building sectors will soon follow.
France's misfortunes are almost rivaled by that of Germany, which predicts a 6.3% contraction of its economy this year, and Italy, which forecasts an 8% slump in GDP.
