France cuts growth forecast as new lockdown starts


Revised forecast: A man shops at a supermarket in Paris. French Finance Minister Bruno Le Maire has cut the country’s 2021 GDP growth forecast to 5% from 6%, following an 8.1% contraction last year. — AFP

PARIS: France’s economy will rebound less than previously expected this year due to the latest four-week nationwide lockdown aimed at halting a surge in coronavirus cases.

French Finance Minister Bruno Le Maire cut the country’s 2021 GDP growth forecast to 5% from 6%, following an 8.1% contraction last year. A Bloomberg survey in March showed economists were expecting the economy to expand 5.7%.

“Closing education establishments and 150,000 stores is essential to slow the spread of the virus, but these measures will have an impact on the French economy, ” Le Maire told Le Journal du Dimanche newspaper in an interview. “This estimate is both sincere and cautious.”

President Emmanuel Macron sought to avoid a third nationwide lockdown to protect the economy but was forced last week to announce tighter restrictions across the country. More contagious, deadlier variants have accelerated the spread of the virus, and the vaccination campaign is yet to have a significant impact after getting off to a slow start.

The new lockdown came into force last Saturday night after a week that saw more than 200,000 new coronavirus cases and as close to 5,500 patients are in intensive care. As well as stores closing, schools will remain shut for three weeks including the holiday period.

Le Maire said government assistance to businesses impacted by the lockdown would cost around 11 billion euros (US$12.9bil or RM53.41bil) in April.

European Central Bank governing council member and Bank of France governor Francois Villeroy de Galhau has urged the European Union to implement a joint recovery fund urgently to help countries cope with the impact of Covid-19.

Le Maire echoed the call, saying Europe must not delay. France was due to receive 5 billion euros from the 750 billion-euro fund in July but this was now unlikely, the finance minister said. — Bloomberg

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