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French economy on course for 9% slump this year - INSEE

·1-min read
FILE PHOTO: A man walks his dog past a commercial space for rent in a street in Nantes

PARIS (Reuters) - The French economy is set to contract about 9% this year as a year-end lockdown-induced slump offsets a stronger than expected rebound from a first phase of COVID-19 restrictions, the INSEE official statistics agency forecast on Wednesday.

The euro zone's second-biggest economy was course to contract 4.4% in the final three months of the year after rebounding 18.7% in the third quarter, when activity surged back more than expected following a first, harsher lockdown.

For the year as a whole, that would leave French gross domestic product 9.1% smaller than in 2019, INSEE said in its latest economic outlook. Both quarterly and full-year forecasts were in line with estimates from two weeks ago.

INSEE's is more upbeat than Finance Ministry, which has built its budget assumptions on forecasts for a 11% downturn this year.

INSEE said economic activity was operating down 8% in December from pre-crisis levels, a slight improvement from the -12% seen in November and the -30% seen in April, during the depths of the first lockdown.

The government imposed a less strict lockdown on Oct. 30 to contain a second wave of coronavirus infections and in recent days has started relaxing some restrictions after case numbers fell.

(Reporting by Leigh Thomas; editing by John Stonestreet)