Illustrative image of a supermarket.

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Philippe LOPEZ / AFP

French growth has picked up again this summer, and even more than expected.

INSEE has revised growth for the third quarter upwards to + 18.7%, against + 18.2% previously estimated.

Among the engines of this growth, household consumption, which is rebounding “strongly”.

However, GDP remains “3.9% below its level in the third quarter of 2019,” says the National Statistics Institute, which explains this revision in particular by a reassessment of household consumption and investment in services.

Thus, over this period marked by deconfinement and the summer holidays, household consumption expenditure “sharply” increased by + 17.9%, after falling by 11.4% in the second quarter, during which the GDP had plunged 13.8%.

Sharp increase in household income

They are thus approaching their pre-crisis level, since they are down 1.3% over one year, underlines INSEE.

Despite a significant rebound of 23.9%, investment is still down 4.8% from its level a year ago.

With an increase in exports greater than that in imports, foreign trade contributed positively to growth in the third quarter, while the change in stocks contributed negatively (-1.5 points).

Notably, in the third quarter household income experienced its strongest quarterly increase since 1983, underlines INSEE, up 3.7%, after a decline of 2.6% in the second quarter.

These revenues are also 1% higher than those recorded over the same period last year.

A new plunge to be expected?

With the fall in recourse to the partial unemployment scheme and the rebound in employment, the wages received by households thus started to rise again (+ 13.1%).

But at the same time, social benefits fell by 6.2% even if they "remain at a high level compared to their level before the health crisis" (+ 5% over one year), underlines INSEE .

Finally, the corporate margin rate recovered in the third quarter to 30.3%, against 27.8% in the second quarter.

But this strong rebound in the French economy will only be flash in the pan.

The second wave of the epidemic, with the curfew and then the re-containment decided by the government, have plunged activity again since October.

It is down 13% in November compared to the pre-crisis level, estimates INSEE, which expects a relapse in GDP between 2.5 and 6% in the last quarter.

Another gloomy prospect, household morale fell in November to its lowest level since the yellow vests crisis in 2018. For the whole of 2020, INSEE expects a recession of between 9 and 10%, like the Banque de France.

The government anticipates a drop in GDP of 11% and has revised its forecast for a rebound next year down to 6% instead of 8% previously, due to the maintenance of health restrictions at least part of year 2021.

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  • Growth

  • Household consumption

  • Economy

  • Consumption

  • GDP