France is expected to experience a very brutal recession in 2020

A person wearing a protective mask walks past a closed shop in Paris on June 8.

The economic horizon for France and the euro area countries is getting a little darker. According to forecasts by the Organization for Economic Cooperation and Development (OECD), published Wednesday, June 10, the contraction of gross domestic product (GDP) will be between 11.4% and 14.1% in 2020 in France.

The largest contraction in the world, in the same proportions as in Spain, Italy and the United Kingdom. Even Argentina, which has just entered default at the end of May, will fare better with an expected drop in GDP between 8.3% and 10.1%. It is in the euro area that the dropout rate, between – 9.1% and – 11.5%, will be the most brutal on the planet.

Due to “Exceptional uncertainty” of the economy this year, the OECD presents its forecasts taking into account two scenarios. One with a second wave of the Covid-19 pandemic spreading across the planet in late 2020, the other without.

Read also European economy experiencing the sharpest slowdown in modern history

“Great fragmentation”

The French economy has accumulated handicaps during this period. “Its comparative advantages lie in sectors among the most affected by the crisis such as air transport, tourism or even luxury, explains Daniel Cohen, director of the economics department of the École normale supérieure. And the Hexagon had no other solution than massive containment, unlike Germany, which had prepared for the pandemic earlier. “

The OECD finds that “Services have been more affected than the industry”, particularly in the hotel, tourism and leisure industries. “We are witnessing the exhaustion of a Jacobin state that wanted to manage everything from the top, from schools to public transport, adds Mr. Cohen. However, a centralizing State is better placed to impose total containment than to manage its exit, where it is necessary to act in small steps and with social consultation, sector by sector. “

Another concern expressed by the OECD: the passage of “The great integration” at “The great fragmentation” with the rise in inequalities between employees, countries and the closing of borders. Even if the recession will be less spectacular in the emerging economies, the social safety nets are more fragile there and the budgetary room for maneuver of governments more limited. However, these economies are affected by the fall in the price of raw materials, the flight of foreign capital (even if it tends to decrease), high debt, a widespread informal sector and the decline in world trade. The fall in trade should not exceed 11.5% this year, a level comparable to that observed during the 2009 crisis, but they contribute up to 30% of the GDP of developing countries, against 18% in the developed regions. According to new estimates given on Tuesday by the World Bank, the pandemic will bring extreme poverty between 71 and 100 million people, with an income threshold set at 1.90 dollars (1.70 euros) per day . This increase will be concentrated in South Asia, particularly in India, as well as in sub-Saharan Africa.

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