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Such is the magnitude of the economic crash in France, that the country is beginning to run out of historical references to compare the crisis that is looming due to the coronavirus epidemic. As announced by the Bank of France on Wednesday, the economy, the second largest in the euro area, fell 6% during the first quarter of 2020 as a result of the impact of the Covid-19 pandemic and the containment measures approved by the Elysium. And the account continues to get heavier: every fortnight of confinement, subtracts 1.5 points from GDP, the French banking institution has warned just 24 hours after the president, Emmanuel Macron, prepares to address the nation again and, in all probability, to announce a further extension of confinement. According to the Governor of France, Franois Villeroy de Galhau, this is the worst figure for GDP evolution since World War II and similar to that recorded during the protests of May 68. The Minister of Economy, Bruno Le Maire, has already compared the situation even with the Great Recession after the crack 1929. German GDP, meanwhile, will fall 4.2% in 2020 and everything points to a 10% collapse in the second quarter. The two great locomotives of the European Union are in recession.

As if more graphics were needed, the Bank of France recalls that in its latest quarterly GDP growth forecast for the first three months of the year, published just a month ago, the projection was for growth of 0.1%. But the impact on the activity of the containment measures leads us to strongly revise our estimate of the quarterly variation in GDP in the first quarter, around -6%, he adds. We must go back to the second quarter of 1968, marked by the events of the month of May, to find a quarterly decline in activity of the same magnitude, stresses the Bank of France in reference to the fall of 5.3 at that time % of GDP, before rebounding strongly, yes, to 8%, in the third quarter of that year.

The problem is that this new crisis is global and the possibility of a comeback does not necessarily depend only on France. In an interview with the LCI station, Villeroy de Galhau has anticipated a very negative growth in France in 2020, although he has expressed his confidence that it should be positive in 2021, highlighting that for this he is helping employers and their employees , in order to be in a position to start growth faster when the containment measures end, stresses the Agence France Presse.

In this regard, the banker stressed that the country has the most generous unemployment system in Europe, fortunately the European and social model is there and it works, while he recalled that, on the contrary, the USA has registered 10 millions of new unemployed in just 15 days. The day before, the Labor Minister, Murielle Penicaud, revealed during a hearing by videoconference in the Senate that the number of workers who have taken part in the partial unemployment now reaches 5.8 million employees, one in four employees in the private sector . We are the only country with this level of partial unemployment, said Penicaud. A record level that, according to LCI, could cost up to 20,000 million euros in three months.

Not everyone seems to share the cautious optimism of the Governor of the Bank of France. A few days ago, I made a comparison with the great recession of 1929. I confirm it, he said Sunday in the Journal du Dimanche Minister Le Maire. This crisis is very violent. It is global since no continent is being fought and it will be durable. The difference from 1929 is that states are reacting quickly and strongly. But the impact will be massive, predicted just a few days ago the person responsible for avoiding the economic shipwreck of France, as he himself described it. The devastating economic figures for the country are known on the same day that the failure of EU ministers was confirmed, after 16 hours of negotiations, in their fourth attempt to give a joint response to the crisis that is causing the coronavirus.

The GDP of Germany will register a contraction of 4.2% in 2020 as a consequence of the impact of the Covid-19 pandemic and the containment measures implemented, which will drag the German economy in the second quarter to a historical fall of 9, 8%, the deepest in the entire historical series and more than double the collapse recorded in the first quarter of 2009, the worst of the Great Recession in the country, according to the forecasts of the main German economic research institutes. Looking ahead to 2021, the five institutes (IFO in Munich, DIW in Berlin, IfW in Kiel, IWH in Halle and RWI in Essen) anticipate a strong rebound in Germanys GDP, with growth of 5.8%, although they warn of that its forecasts have considerable associated downside risks.

According to new academic estimates, the German GDP would have registered a 1.9% drop in the first quarter of 2020, which will worsen between April and June until a 9.8% collapse as a consequence of the confinement measures applied to contain the spread of the virus, which is the largest quarterly contraction in the German economy since data collection began in 1970. Experts anticipate a sharp rise in unemployment, with an increase of 236,000 unemployed compared to 2019, to 2.5 million, which would mean an unemployment rate of 5.5%, half a percentage point more than last year. Likewise, the public accounts of the largest European economy will suffer the impact of the recession and the announced stimulus measures, which will mean that Germany will close the year with a deficit of 4.7% of its GDP, compared to the surplus of 1.4% of 2019. It would be the first negative imbalance in the German budget since 2011.

Germany is in a good position to face the economic collapse and return in the medium term to the levels it would have reached without the crisis, stressed the head of economic forecasts at the Economic Research in Munich (Ifo), Timo Wollmershuser, for who the favorable situation of public finances allows Berlin to implement far-reaching measures to cushion the impact of the crisis on companies and families.

Looking ahead to 2021, the five institutes are confident that Germanys GDP will rebound strongly, with an expansion of 5.8%, which will allow to reduce unemployment again, to an unemployment rate of 5.3%, and balance budgets , thus returning next year to zero black. However, they warn of the considerable downside risks to these forecasts, since the pandemic could take longer than expected to be controlled and efforts to revive the economy are less effective than expected, without ruling out that they may be necessary in the future. additional containment measures, which could result in further production closings and disruptions, increasing the likelihood of financial distortions and business failures beyond the States support capacity.

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Coronavirus: The two largest economies in the European Union are sinking into recession | Economy - The Union Journal