Interview with Christophe Barraud, Chief Economist and Strategist, on his vision of the crisis linked to the Coronavirus. What are the repercussions? What are the prospects for recovery? He will also be present at the Global Lodging Forum on 20 and 21 October 2020 to share his analysis to date.
The analysis
It is important to remember that before the crisis, we were in a world where we expected a slowdown in growth in almost all developed countries by 2020. The health shock amplified the slowdown and even led the majority of developed countries to the biggest recession since the Second World War. Unsurprisingly, the impact was much more violent in China, where the crisis began in the first quarter. It then affected the developed countries, particularly France, Spain and Italy. This led to a contraction in the first quarter, we will have the figures for the second quarter at the end of July and beginning of August, but they will reflect an extremely significant contraction in Europe.
The impact will be all the more significant in Europe, as this is the zone that has chosen to implement the most drastic containment measures and for a longer period of time. As a result, GDP will contract by more than 10% on a quarterly basis in Europe. If we look at the Banque de France’s forecasts, we are likely to be at -15% in France. The country that is doing best in the second quarter is China. Since they took the shock before anyone else, they were able to bounce back mechanically first. This can be explained by the immediate and massive investments in all aspects of infrastructure. Public investment was extremely significant in May and June. The idea of the authorities was to create a foundation of confidence, to be able to return to growth at a time when there was a drop in external demand, but also on a domestic level. Although consumption in China is improving compared to the first quarter, on a year-on-year basis all the data is negative.Consumption is taking a long time to recover. This is all the more true for all sensitive sectors such as tourism, but also shopping centres and recreational activities. Although this is not a surprise, it is clearly reflected in the figures for the month.
The Coronavirus crisis has affected...
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