PARIS (Reuters) – France’s economy should shrink less than expected in the second quarter as business activity began recovering in May after a nationwide lockdown was eased, the INSEE official statistics agency forecast on Wednesday.
INSEE said the euro zone’s second-biggest economy should contract 17% in the second quarter after a previous forecast last month of a 20% contraction.
The agency estimated that the economy was running at 22% below normal levels after the lockdown, imposed in mid-March, was eased on May 11. Activity was down as much as 33% in April.
Economic activity would be 12% below normal levels in June, INSEE said.
A rebound underway in consumer spending was also expected to prove sustainable, INSEE said. Consumer spending was only 7% below normal levels in May as more shops were allowed last month to reopen. Consumer spending was 31% below normal levels in April.
Consumer spending, traditionally the motor of French economic activity, was expected to be 5% below normal levels in June, INSEE estimated.
The agency said April would remain the worst-ever month the French economy has seen in peace time since records began.
French government put the country under one of Europe’s most stringent lockdowns in mid-March to fight the COVID-19 pandemic spread.
(Reporting by Myriam Rivet; Writing by Matthieu Protard; Editing by Leigh Thomas and Richard Lough)