6th May 2020
Hugues Chevalier, Economist
After more than 6 weeks of lockdown in Europe, the first estimates of the consequences of the pandemic are being published. Containment has put around 35% of the activity to a complete halt, which corresponds to 3 points of GDP per month. With the assumption of a two months lockdown and of a gradual restart of the activity, the impact would be between 8 and 10 points of GDP, which is consistent with a contraction of the GDP of 8% in 2020. But the rebound of the activity could be put at risk by the secondary effects of the crisis, such as further shutdown of the internal and external boarders of Europe penalising exports. The only good news we have got is that the purchasing power of the households has been resilient due to the specific social safety nets implemented here. Therefore, after the lockdown, private consumption should rebound rather quickly. With respect to the different activity sectors, extraordinarily strong heterogeneity has been reported. Then, for instance, the automotive and construction sectors have been very hardly hit with a contraction of their production of more than 90%. Meanwhile, speciality chemistry shows a strong increase of its output. The food retailing sector have been performing rather well with a rebound of 35% of its sales (y/y). The main issue which could be a serious slowdown for the rebound of the activity, and which has been consistently reported, is the total mess in the transportation sector within Europe following the shutdown of the national borders. Then, bottlenecks due to transport problems and raw material supply shortage have been said to be the main reason for the lockout of almost all French packaging plants despite the increased demand for these products.