June 17, 2020 / 4:31 PM / 25 days ago

French economy to slump 17% in second-quarter despite May rebound: INSEE

PARIS (Reuters) - France’s economy should shrink less than expected in the second quarter as business activity began recovering in May after a nationwide lockdown was eased, the INSEE official statistics agency forecast on Wednesday.

INSEE said the euro zone’s second-biggest economy should contract 17% in the second quarter after a previous forecast last month of a 20% contraction.

The agency estimated that the economy was running at 22% below normal levels after the lockdown, imposed in mid-March, was eased on May 11. Activity was down as much as 33% in April.

Economic activity would be 12% below normal levels in June, INSEE said.

A rebound underway in consumer spending was also expected to prove sustainable, INSEE said. Consumer spending was only 7% below normal levels in May as more shops were allowed last month to reopen. Consumer spending was 31% below normal levels in April.

Consumer spending, traditionally the motor of French economic activity, was expected to be 5% below normal levels in June, INSEE estimated.

The agency said April would remain the worst-ever month the French economy has seen in peace time since records began.

French government put the country under one of Europe’s most stringent lockdowns in mid-March to fight the COVID-19 pandemic spread.

Reporting by Myriam Rivet; Writing by Matthieu Protard; Editing by Leigh Thomas and Richard Lough

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