How much will France’s GDP fall in 2020?

First, we estimate the fall in French GDP in 2020, assuming that GDP will return to potential GDP in the fourth quarter and that potential GDP has been reduced by the new health standards in response to the COVID crisis (we believe these standards will reduce economywide productivity by 5.3%). In this scenario of problems on the supply side (fall in productivity due to health standards) but not the demand side, GDP will fall by 8.5% at an annual average in 2020 compared with 2019. But there will be problems on the demand side also (due to corporate debt, cautious households, a permanent fall in demand for some goods and services and the fall in global trade), in all likelihood leading GDP to fall by more than 8.5% in 2020.