Measures to contain a fresh surge in Covid-19 infections in France are cutting short the fledgling economic rebound recorded since a country-wide lockdown ended in the spring, the national statistics office warned on Tuesday.
Gross domestic product (GDP) will stagnate in the fourth quarter, Insee said in its quarterly outlook, resulting in a nine-percent shrinkage of the economy over 2020 as a whole.
The dire forecast comes a day after the government placed Paris and its nearest suburbs on maximum coronavirus alert, ordering the closure of bars and cafes as well as curbs on gatherings, and urging people to work from home.
Insee had previously forecast a small GDP bump of one percent for the final three months of the year, building on an estimated 16-percent leap in the third quarter which came after France relaxed a nationwide lockdown in May, energising the economy as businesses returned to a near-normal level of activity.
But a renewed spike in daily virus infections has sparked worries about fresh restrictions strangling growth.
"This forecast reflects the great uncertainty weighing on the coming months," Julien Pouget, head of Insee's macro economics department, told reporters.
France reported nearly 17,000 new coronavirus cases on Saturday alone, the highest daily number since the country began widespread testing.
On Monday new daily cases dropped to 5,084, but experts cautioned that case figures are typically lower at the start of the week.
More than a third of companies are still unable to predict when their business will return to normal, the highest number since the start of the health crisis, Pouget said.
As corporate activity froze and the hospitality, transport and leisure sectors suffered, even a drop in fourth quarter GDP could not be ruled out, he said.
Consumer confidence "hasn't really rebounded" since April, Pouget said, adding Insee had also detected a slight weakening of household spending after a summer spike.
With the downturn, many French people say they fear for their jobs, Insee said.
The bureau now expects a French unemployment rate of 9.7 percent by the end of the year, compared to 8.1 percent at the end of 2019.
