French Growth Surges in False Dawn for Recovery: Economy Update

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The French economy grew by a record in the third quarter, a rebound that’s now being derailed by the resurgence of the coronavirus and new government restrictions across Europe that will temporarily close businesses.

The 18.2% jump in output — exceeding economists’ expectations — followed a 13.7% drop in the previous three months, when activity came to a near halt amid efforts to contain the pandemic. The figures are the first in a deluge of numbers due Friday expected to show huge growth spurts. Germany’s economy is forecast to have expanded 7.3%, the euro area almost 10%.

More up-to-date indicators paint a far gloomier picture, and the bloc’s economy is now at risk of slipping back into recession. The European Central Bank has acknowledged the increasing danger and signaled it will pump more stimulus into the economy in December.

Key Developments:

  • ECB pushes governments toget on with spending
  • Germany, France imposemonth-long curbs
  • Francesays second lockdown will cut output by 15%

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88,521 in U.S.Most new cases today

-4% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23

-0.​9213 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23

4.​7% Global GDP Tracker (annualized), Sept.


French GDP (7:30 a.m. Paris)

All parts of the French economy rebounded sharply, with a particularly strong surge in consumer spending to a level only 2.1% below the third quarter of 2019. The recovery in investment was less vigorous, reaching a level 5.1% below last year’s.

The country will aim to limit the drop in economic activity during the country’s second lockdown -- starting Friday -- to 15%, half the decline recorded in the spring, according to French Finance Minister Bruno Le Maire. The government is reactivating a solidarity fund to help companies weather the crisis.

Coming Up (all times CET):

  • German retail sales (8 a.m.)
  • French inflation (8:45 a.m.)
  • Italian unemployment (9 a.m.)
  • Austrian GDP (9 a.m.)
  • Spanish GDP (9 a.m.)
  • ECB Survey of Professional Forecasters (10 a.m.)
  • German GDP (10 a.m.)
  • German government updates economic forecasts (10 a.m.)
  • Italian GDP (10 a.m.)
  • Portugal GDP (10:30 a.m.)
  • Euro-area inflation, GDP (11 a.m.)
  • ECB policy makers Holzmann, Mersch, Visco, Guindos, Weidmann speak

— With assistance by Jeannette Neumann, Harumi Ichikura, Catherine Bosley, William Horobin, and Alessandra Migliaccio

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