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France’s economy contracted by record 13.8 percent during lockown

France's economy contracted by a record 13.8 percent in the second quarter under the impact of coronavirus lockdowns, the national statistics institute INSEE said on Friday.

France's economy contracted by record 13.8 percent during lockown
The closure of all non-essential businesses unsurprisingly had a major effect on the economy. Photo: AFP

The seasonally-adjusted quarter-on-quarter drop in gross domestic product (GDP) was better than forecasts but worse than the performance of its eurozone peers.

“GDP's negative developments in first half of 2020 is linked to the shut-down of 'non-essential' activities in the context of the implementation of the lockdown between mid-March and the beginning of May,” INSEE said in a statement.

INSEE also updated the figure for the first quarter – when lockdowns had just begun to be implemented – to a 5.9 percent contraction, from the 5.3 percent it had previously estimated.

The second quarter figure means the French economy has been shrinking for three consecutive quarters and continues to be in recession.

France's second quarter contraction was much sharper than the record 10.1 percent fall in Germany. Austria suffered a 10.7 percent contraction and Belgium 12.2 percent.

However the drop was better than INSEE's own forecast from mid-June of a 17 percent drop. The French central bank had estimated a 14 percent fall at the beginning of July.

The analyst consensus established by Factset was for a 15.3 percent drop in GDP.

Domestic consumption is the main driver of the French economy and household consumption fell 11 percent during the quarter.

Investment fell by a greater amount – 17.8 percent.

Unsurprisingly given the lockdowns and travel restrictions hitting international tourism, there was a nearly 46 percent drop in transportation and a 57 percent drop in the restaurant and hotel sector.

INSEE noted that overall “the gradual ending of restrictions led to a gradual recovery of economic activity in May and June, after the low point reached in April.”

Finance Minister Bruno Le Maire said after the figures were released: “We are not powerless in the face of the crisis.”

“The French government has taken extraordinary measures to support businesses during the crisis and keep people in pay even when there is little work.

“We are going to fight to do better than the minus 11 percent” forecast for the entire year by the government, Le Maire added.

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BUSINESS

French court hands Amazon €90,000-per-day fine over contracts

French authorities on Wednesday slapped a €90,000-per-day fine on e-commerce giant Amazon until it removes abusive clauses in its contracts with businesses using its platform to sell their goods.

French court hands Amazon €90,000-per-day fine over contracts

The anti-fraud Direction générale de la concurrence, de la consommation et de la répression des fraudes (DGCCRF) service said the online sales giant’s contracts with third-party sellers who use its Amazon.fr website contain “unbalanced” clauses.

“The company Amazon Services Europe did not comply completely with an injunction it was served and it is now subject to a fine of €90,000 per day of delay” in applying the changes, the DGCCRF said in a statement.

It also urged the platform to conform with European rules on equity and transparency for firms using online platforms.

Amazon said the order would harm consumers.

“The changes imposed by the DGCCRF will stop us from effectively protecting consumers and permit bad actors to set excessive prices or spam our clients with commercial offers,” the e-commerce giant said in a statement.

“We will comply with the DGCCRF’s decision but we absolutely do not understand it and we are challenging it in court,” responded the e-commerce giant in a statement.

Amazon said the clauses that the DGCCRF has ordered removed had, for example “prevented the appearance of exorbitant prices for mask and hydroalcoholic gel during the pandemic”.

In 2019, Amazon was fined €4 million for “manifestly unbalanced” contract clauses with third-party sellers on its site in a case brought by the DGCCRF.

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