PARIS (Reuters) – France’s post-lockdown economic rebound is likely to peter out in the fourth quarter as a resurgence of new coronavirus infections weighs on business activity, the statistics agency INSEE said on Tuesday, lowering its outlook.

Growth in the euro zone’s second-biggest economy was expected to be flat in the final three months of the year from the previous quarter, down from a forecast for 1% last month, INSEE said in its quarterly outlook.

Despite the lower forecast, it said it still expected the economy to contract 9% in 2020 as a whole with activity rebounding 16% in the third quarter, down from a forecast of 17% last month.

In both the third and fourth quarters, economic activity in the country should run at 95% of pre-epidemic levels, INSEE said.

France recorded a 13.8% drop in gross domestic product in the second quarter after the government ordered one of Europe’s strictest lockdown to curb the COVID-19 pandemic.

“After the sharp rebound linked to the end of lockdown, the economic activity could mark time at the end of the year due to the resurgence of the epidemic”, INSEE said.

France has seen COVID-19 cases surge in recent weeks to record highs. On Monday, the number of people hospitalised daily for the virus shot up by more than 300 for the first time since April 12, when the country was in the middle of the lockdown.

The agency also expects unemployment to jump in the second half of this year, with the jobless rate reaching9.7% by the end of the year, drifting away from French President Emmanuel Macron’s target of a 7% unemployment rate in 2022. It compares with a 8.1% unemployment rate in 2019.