A few days after INSEE, another institute examines the effects of confinement on activity. For the OFCE, a month's confinement should cut French gross domestic product (GDP) by 2.6 points over one year. " It is a completely incredible situation " and "out of all proportion to the shocks that we have known ", in 2008 or in 1929, estimated Xavier Ragot, president of the French Observatory of economic conjunctures, during a press videoconference. If the containment were to be prolonged, the OFCE estimates that the loss of GDP would be “ approximately ” doubled, but warns that certain factors could “ worsen ” the impact on activity, in particular an “ amplification of the break in the chains of values ”, or the risk of corporate bankruptcies.
Read also: Coronavirus: a month of confinement would lose 3 points of GDP to French annual growth
According to the Observatory, the first factor in reducing French GDP is the change in " consumption behavior " due to confinement. It would cause a drop of 1 point of GDP, consumption representing 70% of the national GDP. The fall in investment would weigh up to 0.7 point, while disruptions in working conditions (telework, difficulty accessing work sites, etc.) would cause a loss of 0.4 point of GDP. The closure of schools alone would weigh 0.3 point of GDP, preventing 1.2 million workers from working. Finally, other effects, such as the weakening of the trade balance, in particular that linked to tourism, would cause a loss of 0.2 point of GDP.
The organization considers it urgent to fight against corporate bankruptcies. She notes that the consequences are very heterogeneous depending on the sector of activity, which " justifies targeted budgetary and fiscal support measures ". The OFCE judges, however, that once the containment has been lifted, the French economy could experience " a potentially significant rebound (...) due to savings built up by households and the" resilience of the productive fabric "allowed by public support. " There is a certain urgency in having a doctrine of State intervention (...) to avoid bankruptcies and so that the resumption of activity at the end of confinement takes place in a world where the productive fabric is preserved, ”insisted Xavier Ragot.
Last week, INSEE estimated that the economy was currently turning two-thirds and that a confinement lasting one month would translate into 3 points of GDP less over a year. The OFCE estimate is slightly lower, but INSEE did not comment on the rebound in activity, once the epidemic ended. In addition, the OFCE adds that the use of partial unemployment could concern “ around 5.7 million jobs (around 21% of salaried employment), at a direct cost to public finances of 2.9 billion d 'euros per week or 12.7 billion euros per month '.