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Due to the coronavirus pandemic, the French economy will see the second-largest GDP shrinkage of all the economies analysed in their report. In the IMF’s economic outlook update this month, France’s GDP is expected to drop by 12.5 percent. Only Italy and Spain are higher with a 12.8 percent drop in GDP this year.
This represents a larger number than the government’s 11 percent prediction and would be the worst to hit the country since 1945.
In the report, the IMF said: “The baseline projection rests on key assumptions about the fallout from the pandemic.
“In economies with declining infection rates, the slower recovery path in the updated forecast reflects persistent social distancing into the second half of 2020; greater scarring damage to supply potential from the larger-than-anticipated hit to activity during the lockdown in the first and second quarters of 2020, and a hit to productivity as surviving businesses ramp up necessary workplace safety and hygiene practices.
“For economies struggling to control infection rates, a lengthier lockdown will inflict an additional toll on activity.”
Even, Minister for the Economy, Bruno Le Maire stated this week he feared a quick economic growth was unlikely to happen.
He said: “I do not believe in an extraordinarily rapid recovery after a brutal collapse which would allow us to find at the end of 2020 the same level of growth that we had at the beginning of this year.”
The European Area is also estimated to shrink by 10.2 percent.
In order to stimulate Europe’s economy, Mr Macron will meet with German Chancellor, Angela Merkel in order to discuss the EU’s recovery fund.
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The EU Commission has proposed a €750billion (£676billion) coronavirus bailout package for the bloc.
Largely based on the Franco-German proposal, the EU believes the package should be made up of €500billion (£451billion) in grants and €250billion (£225billion) in loans.
Such is the dire state for the bloc, Ms Merkel has insisted countries should show solidarity during the pandemic.
She said this month: “The pandemic shows us how vulnerable Europe is.
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“Therefore I want to stress to you that cohesion and solidarity in Europe were never as important as they are today.”
There has been a conflict with the bloc, however.
Both Italy and Spain, the two worst-hit countries on the continent, had criticised the bloc for its lack of support early into the pandemic.
The recovery will be essential in helping their respective economies, however, some states such as the Netherlands have opposed the makeup of the package.
Part of the ‘Frugal Four’ countries alongside Denmark, Sweden and Austria, Holland would rather see a fund made up of more loans rather than grants.
In reference to the differing demands from each state, Ms Merkel said: “The medical and economic consequences of the crisis are deepening the imbalances in the European community.
“We must not allow the economic prospects of the EU member states to drift apart as a result of the pandemic.”
Additional reporting by Maria Ortega.
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