27 Apr What impact COVID-19 will have on Corsica’s economy?
COVID-19 outbreak causes significant damages on the French island Corsica’s local economy. If the virus does not stop before the summer season, it will be disastrous for the inhabitants living mostly off of tourism.
I chose to focus my investigation on the place I come from, the island Corsica, located in the south of France, in the Mediterranean. The island has got not more than 339,178 inhabitants and 30% of its Gross Domestic Product (GDP) is based on tourism.
Each year more than 3 million tourists come to Corsica during the summer season, which goes from April to September. A majority of locals make a living off of tourism, by working in hotels, restaurants, souvenirs shops, local airlines and shipping companies… Therefore, it would be disastrous for the local economy if there were no tourists during the summer season because of the virus.
As Corsica is an estival destination, winter is considered as the low-income period. The issue for the island is the pandemic is happening right at the end of winter when companies’ treasury is low. If they do not have income during summer to refill their treasury lots of them will have to close down.
I talked to Fabrice Onetti, the owner of two companies located in Corsica. His companies are both wholesaling companies centred on tourism. The first one sells souvenir jewels to gift shops, and the second one is specialised on summer products, such as beach towels, pool floats, flip flops, and these products are sold to supermarkets and gift shops.
He explained to me that the period of the year when the supermarkets and gifts shops are gaining more money is during summer thanks to the 3 million tourists, so if there are no tourists, there is no work.
When I asked Mr Onetti what impact a summer season without tourists would have on his companies, he said “From May 11th, end of the lockdown in France, I will wait one week to see if my customers, the owners of gift shops and supermarkets are ordering as usual. If they are not I will, unfortunately, have to dismiss my six employees… I will have no other choice because the companies will not have enough treasury to keep paying them without orders from our customers.”
To this date the impact COVID-19 will have on Corsica’s local economy is still uncertain and we do not know what the government will do about it. As Mr Onetti explained to me, we do not know what will happen in the future, so, for now, there is no solution, the only thing to do is waiting to see how the virus will develop and what decisions the French government will take. The extent of the damages will only be measurable in September, at the end of the summer season.
For now, President Macron said that travelling will be forbidden during summer 2020. People will not be able to travel out of the country or in the country itself. The President took this decision because he is scared that if people from metropolises such as Paris, go spend their summer in provinces such as the south coast, it will spread the virus even more.
If nothing changes before summer, the decision of the President about travelling will remain the same and it will be a disaster for Corsica and other French departments living off of tourism.
I tried to contact the tourist board office of Bastia (+33 04 95 54 20 40), but unfortunately, they did not answer. The answering machine said the office is closed during quarantine so they do not take calls and it sent me over to their website (https://www.bastia-tourisme.com/), but I could not find any answers to my questions. I had planned to ask them: What impact would have on Corsica’s economy a summer without tourists? What measures can be taken to face this situation?
Tourism is only one of the various examples of COVID-19’s damages on the economy, but many other fields are going to be impacted in the same way.
This situation is worrying for all the companies and workers who can not earn money while everything is closed. How will people survive during quarantine without getting a salary? Since March 17, normal life has stopped and most people are worried about how they will survive without being able to work and earn a salary. What will be the aftermath of COVID-19 for all the workers and companies?
During his allocution on March 16, after announcing quarantine, President Macron talked about the financial aspect, he promised that the government would support people financially by unlocking funds and pushing back the tax payments. The government also promised to give financial help of 1500€ to all the self-employed and independent workers.
The “exceptional financial help COVID-19” form was created by the French public service organism, URSSAF. This form has to be filled by independent workers and companies to get financial support from the government. The form asks several questions such as the name, profession, family status, number of children, questions about your company and the impact of the virus on it, to know if you are eligible for financial help.
I asked Fabrice Onetti what he thinks about this form, “In my opinion, the form is really simple to understand and easy to fill, what they ask is explicit. The government did a great job, I sent back the form on March 20 and received the financial help for my companies about fifteen days later. What has been done for now by the French government is helpful for the companies during this hard situation.”
The form aims to support the employers, so they can continue paying their employees even if the company stopped its activity during the quarantine.
Fabrice Onetti said “The employer is refunded up to 85% by the government, for example, let’s say the company usually pays an employee 1000€, during quarantine the person will get 850€. Then the employers decide if they want to give their employees the 15% left or not because this part won’t be refunded by the government, so it depends if the company can afford it or not.”
He also explained that the government provides companies with loans which have a 0% bank rate. Therefore, companies can loan up to a quarter of their yearly turnover to help them with their treasury. Then, if they did not use the money they have one year to pay off the credit, and if they used it, it can be paid off on a period of five years.
This information shows that the government is trying to support companies, but the financial issues caused by COVID-19 will be deeper than that. Even considering all the numbers and estimations it is still difficult to know to what extent COVID-19 will spread and what will be the final damages of the virus on the planet.
One thing we are sure about is that quarantine has a significant impact on the economy, since everything is closed and people can not work, the economy is practically stopped, and the country keeps losing money.
The Governor of the Bank of France, François Villeroy de Galhau said to BFMTV on April 23, “Each 14 day period of quarantine costs us 1,5 point of GDP”. I also found research done by France 5 TV which said that each week of quarantine costs France 15 billion euros, which means 2 billion euros per day, 80 million euro per hour and 1,3 million euros per minute.
Specialists are afraid about the aftermath of the virus and the possible economic crisis it could cause. French philosopher André Comte-Sponville was invited to a TV show about the economic crisis caused by COVID-19, which was broadcasted on the French channel France 5 and he said, “It is not the first pandemic the world faces, but the economic cost is unprecedented. The economists say this time the crisis will be even worse than 1929 one, and the damages of this crisis will not impact us, the old generation, it will impact our children and the children of our children… Who will pay the 114 billion estimated debt? Not old people but the young generations and it makes me want to weep.”
The French journalist Nicolas Beytout told the TV magazine “C l’hebdo”, “The emergency now is to start working again. During 8 weeks our priority was health, but now that we know the process to follow we need to stop quarantine. Our neighbours work more than us. We need to work to restart the economic system.”
COVID-19 is considered as one of the six most important crisis of the past few years, according to the World Health Organization (WHO). The virus already caused a loss of several billions of dollars for the international economy, and according to American financial group, Bloomberg LP it will continue. France is currently the fourth most affected country after the US, Spain and Italy, with 161,665 confirmed cases and 22,648 total deaths by April 26.
To this day the aftermath of COVID-19 and its damages can not be anticipated, only time will tell us the impact it will have on our lives, but we can already imagine it will have significant damages on the economy. The whole world is affected by the situation, so we must find a way to stop the spreading and eradicate the virus to limit the damages as much as we can.
