France has the second-largest economy in the European Union (EU) after Germany. Hopefully, the major European economy is growing again. The local economy returned to growth this month even as the activity in the rest of the region continued to decline.
Interestingly, the local economy grew this month for the first time. The country removed certain restrictions. This factor helped to support domestic consumption. Let’s have at the country’s Purchasing Managers’ Index, which tracks activity in the manufacturing and services sectors. Importantly, an initial reading jumped to 51.3 in June. As a result, compared to May the index grew from 32.1 to 51.3 in June. As a reminder, readings above 50 indicate expansion.
The country benefited from the fact that companies are more domestically focused and this is factor helped to support the local economy. Moreover, as can be seen from the example of China domestic demand played a crucial role when it came to supporting the economy.
According to the French President Emmanuel Macron, no French company will be allowed to collapse due to the coronavirus pandemic. Furthermore, the government will spend $521 billion to help the economy to get back on track.
Importantly, Europe’s largest economies removed certain restrictions in June. As a result, many companies are working. Such decisions helped to drive the demand for goods and services.
Also, the initial composite PMI for the countries that use Euro jumped to 47.5 in June from a record low of 13.6 in April and 31.9 in May.
Unfortunately, the EU gross domestic product (GDP) is still expected to suffer a steep decline in the second quarter. In the first quarter of this year, the EU GDP suffered the deepest contraction on record.
Local economy and the French government
Hopefully, the French government is working hard to support local companies. It is worth noting that, France is planning to extend its jobs support program by up to two years. Moreover, the country’s government is considering measures that allow people to work reduced hours partially paid by the government.
France already pledged to protect the workforce in the country’s aviation industry. The government will support world-famous companies such as Airbus, Air France, Safran, and Thales.
The government pledged nearly $17 billion to the companies mentioned above as well as to the aviation industry in general. According to the French Economy Minister Bruno La Maire, the package will secure 100,000 jobs over the next six months. Interestingly, a $16.9 billion package includes $7.9 billion in support of Air France.