France’s Lockdowns Force Government to Revise GDP Estimates Lower, Debt to Rise
Arslan Butt • 1 min read
The latest national lockdown imposed across France to combat the third wave of the coronavirus pandemic has forced its government to lower its estimates for the economy’s recovery through 2021. Finance Minister Bruno Le Maire stated that the French economy could post a growth of 5% this year, lower than the previous estimate for a 6% growth.
Meanwhile, the country’s public debt could increase to 9% of the GDP this year, higher than the earlier forecast when the government expected it to touch 8.5% of the GDP instead. The public debt is expected to total about 118% of France’s GDP in 2021, as opposed to earlier expectations for a figure of 115%, while by December, Le Maire expects it to increase up to 122% of the GDP as well.
The latest round of lockdowns could force the government to roll out more support for affected companies, in the form of rent payments and partial unemployment measures. The services sector has been the most affected, especially businesses in hospitality and leisure, with bars and restaurants forced to remain shut for several months even as tourist movement remains nil.
However, Le Maire has expressed hope that France could rebound quickly once it emerges from the lockdown, supported by strong fundamentals. The current lockdown is estimated to cost the economy a loss of around 11 billon euros, as a result of around 150k businesses forced to close down temporarily.