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Economic activity in France shrank by 35% due to quarantine

Economic activity and household spending in France fell 35 percent to about 65 percent from normal levels because of the coronavirus outbreak, the national statistics office said today, quoted by world agencies.
The calculations were made by comparison between the normal economic activity for this period of the year and the situation during the last week, TASS specifies.

The statistical agency gave the first picture of the impact of tight restrictions imposed in the country on the economy with the monthly business confidence index published today, Reuters informed.

The indicator recorded its strongest decline since 1980 when its measurement began. The index slipped to 95 points for March versus 105 points in February, with a particularly strong contraction in the services and retail sectors, BTA reported.

The French government has prepared an economic package worth €45 billion, or 2 percent of the national gross domestic product (GDP), which includes mostly rescheduling taxes and remuneration contributions for companies, as well as compensation payments for firms that transfer their part-time employees. The government also guarantees corporate loans totalling up to 300 billion euros, or 15 percent of GDP, in a bid to maintain lending.

According to the statistics office, it is still too early to predict how strong the decline will be, but according to experts, every month the quarantine will shrink economic activity by 12 percentage points on a quarterly basis and by 3 percentage points per year.

In last week's extraordinary budget update, the government forecast a contraction of France's economy by 1 percent this year instead of the previously anticipated growth of 1.3 percent.

Finance Minister Bruno Le Mer later said the decline could be much stronger and compared the situation to the Great Depression of 1929.