French consumer spending plunges 34pc

PARIS (AFP) – Consumer spending in France dropped 33.7 per cent in April compared with February, before the country went into lockdown to halt the coronavirus outbreak, statistics agency Insee reported yesterday.

The government ordered businesses shut and residents to stay home on March 17, sending the economy into a tailspin that experts say could persist for months. Compared with March, consumer spending was down 20.2 per cent.

In the first three months of the year, the gross domestic product (GPD) shrank 5.3 per cent, Insee said yesterday, less than its initial estimate of a 5.8 per cent decline. But the agency warned this week that GDP would probably contract 20 per cent in the second quarter under the full effect of the lockdown, which the government began easing only this month.

Consumer spending in April was also down by more than a third – 34.1 per cent – from the same month last year.

The recession has also pulled down inflation, which slowed to just 0.2 per cent in May from a year earlier, reflecting lower energy prices as well as falling costs for food and manufactured goods such as steel, machinery and textiles, Insee said.

People wait in line for the re-opening of the Printemps department store on the Boulevard Haussman in Paris. PHOTO: AFP

More than half of France’s private-sector workers found themselves without jobs after the lockdown was imposed, though the government has continued to pay the bulk of their salaries to avoid a surge in layoffs that could prove permanent for many.

It has announced EUR110 billion (USD120 billion) in financial aid and other relief for businesses, although Finance Minister Bruno Le Maire has nonetheless warned of a “cascade” of company failures.

The government has forecast an eight per cent GDP slump for the full year, but Insee said this week that the decline would likely be worse.

“Households are displaying a marked pessimism concerning France’s economic situation,” Insee said on Wednesday.