The French economy is officially in recession and contracted by 5.8% in the first quarter, mainly due to the containment in place since mid-March to stem the Covid-19 pandemic, according to a first estimate released on Thursday by INSEE.
This is the largest decline in the history of quarterly GDP assessments started in 1949, and far exceeds the declines in the first quarter of 2009 (-1.6%) or the second quarter of 1968 (-5 , 3%), specifies INSEE. After the 0.1% drop in French gross domestic product (GDP) recorded in the last quarter of 2019, this performance confirms that France has indeed entered into recession.
“Unprecedented” drop in household spending
This drop in activity "is mainly linked to the cessation of" nonessential "activities in the context of the implementation of containment from mid-March", explains the National Institute of Statistics in its publication . This assessment is in line with that of the Banque de France, published in early April, which estimated the contraction of GDP at around 6% in the first quarter.
Household spending fell “unprecedented” by -6.1%, while many shops, restaurants and even cafes were closed by government decision, according to INSEE. Business investment also recorded a sharp decline of -11.8%.
Overall, domestic demand thus contributed -6.6 points to the decline in GDP during the past quarter.
- 3 points over a year in each month of confinement
The first illustration of the economic crisis from the start of the epidemic, foreign trade was also down: -6.5% for exports and -5.9% for imports. Ultimately, it contributes negatively (-0.2 point) to the decline in GDP. Conversely, inventory changes contributed positively, up +0.9 points.
INSEE does not publish a forecast for the whole of 2020 but it estimated that each month of confinement would cut French growth by 3 points over a year and that the recovery "will take time" after the confinement, supposedly be gradually lifted from May 11. The government expects, at this stage, a fall in GDP of -8% this year.
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