CEMAC zone: recession could reach 6% according to BEAC

All the indicators are certainly not red. But most of the economic indicators in the six countries of the Economic and Monetary Community of Central Africa (CEMAC) are already found the Monetary Policy Committee (CPM) of the Bank of Central African States (BEAC) at the end of the second annual session on June 24, 2020 in Yaoundé.

Analyzing the situation in Central Africa, it emerges that in the short and medium terms, the CEMAC zone is affected by the health crisis and the fall in the prices of the main export products. "

"In the first half of 2020, the revival of productive activities was slowed down in the sub-region by the disruption of supply circuits for imported products as well as by the restrictive measures adopted by the various governments to contain the effects of the pandemic. Although it is premature for the moment to fully grasp the impact of COVID-19 on national economies, it is already anticipated during this first semester a drop in production as well as a det…

"If we manage the rest well, the shock may remain temporary" (Bank of France)

The coronavirus crisis should drop French GDP by "at least 8%" this year depending on the duration of "act II" from deconfinement until full recovery, said the Governor of the Bank of France François Villeroy de Galhau, in an interview with the Sunday newspaper, in which he delivered his diagnosis on the state of the country. The coronavirus crisis should drop French GDP by "at least 8%" this year depending on the duration of "act II" from deconfinement until full recovery, said the Governor of the Bank of France François Villeroy de Galhau, in an interview with the Journal du dimanche. As a reminder, the government is currently counting on a fall of 8%.
 
"If we manage the rest well, the shock may remain temporary" (Bank of France)

"If we manage the rest well, the shock may remain temporary," he added, recalling that the International Monetary Fund (IMF) predicts that France could regain strong growth at + 4.5% next year. .

"We will not (...) suddenly move to a normal recovery" with the deconfinement from May 11, he anticipates: "It will be an act II, where we will have to grow at the same time health confidence and economic confidence, for entrepreneurs as well as for employees, "said François Villeroy de Galhau. Problem, nobody knows how long this stage will last. "We do not yet know the duration of Act II until the complete recovery," he said.

The protective role of the State should diminish

For him, the State "plays a role of major shock absorber", faced with the crisis: "The massive public intervention absorbed at least two thirds of the shock, and reduces all the more its impact for households and businesses ", he argued.

"Its protective role should diminish as the recovery in the various sectors," he says, "especially since, of course, this collective shock absorber will have to be paid in the future".




55 billion euros in requests for state-guaranteed loans

According to him, the banks have registered to date 290,000 requests for loans guaranteed by the state for an amount of 55 billion euros.

"The success is growing: we are at 20,000 additional requests per day. The beneficiaries of the guaranteed loans are mostly VSEs with less than 10 employees, who represent almost 90% of decisions and more than half of the amounts," said François Villeroy de Galhau.

To the question "do the banks play the game?", He assured that "overall, they are doing their job".

"In the future, it will be necessary to see if all the companies regain the financial capacity to repay their loan," added the governor of the Banque de France.
"We could consider, on a case-by-case basis, especially for the most durably affected sectors, that the deferral of tax and social charges become abandonments, or even imagine contributions in quasi-equity," he said: " But it will be pragmatic and selective because it is public money."

Public debt at 115% of GDP

"France will come out of this shock with a public debt increased by at least 15 points of GDP, to 115%. In the long term, it will be necessary to repay this money", insisted the governor. "We will have to aim for more efficient management, especially since the French do not wish to pay more taxes", he warned

Meanwhile, "it is too early to (...) say" if the 110 billion mobilized by the state to support the economy will be enough.

A revival of consumption is possible, given that many French people spend less than what they earn with confinement. This difference "should be tomorrow a store of purchases, and therefore of growth" provided they are "reassured in terms of health", according to him.




European stimulus fund

To accelerate the recovery, François Villeroy de Galhau recalled that one of the growth accelerators would go through European public investment programs.

"This would increase our production capacities and reconnect with our long-term priorities such as the fight against global warming (...). For the recovery, the principle of a recovery fund proposed by France is acted : will remain to determine its amount and its funding ".

The ECB can do more if necessary

While the European Central Bank (ECB) has already decided to bring € 4 trillion in cash this year to help the European economy cope, it could take further steps to ensure that inflation in the euro zone is in line with its mandate (...).

"For the future, with inflation remaining below our target of 2%, we should maintain very low rates and very abundant liquidity. And if more were needed to fulfill the mandate of price stability entrusted by treaties independently, so we will, "said the man, who is also a member of the ECB's governing council.