It is true then, when China sneezes, the world catches a cold. In the second quarter of 2020, France’s Gross Domestic Product (GDP) has collapsed by 13.8%, that is to say 110,000 million euros fewer over the period, according to data released this Friday July 31 by the Insee. According to Mathieu Plane, from the French Economic Policy Institute, “it’s the greatest fall recorded since WWII”.
If we take a look at household consumption – recorded -11% in comparison with the first quarter – they consume fewer services (-15.3%), and purchase fewer manufactured goods (-12%). The energy bill has dropped as well in comparison with the first quarter (-11.1%) because of the strong decrease of gas purchasing throughout lockdown. And there is still the food budget that remained stables, -0.5% in comparison with the first quarter of 2020 (+1.8% in comparison with the second quarter of 2019).
Production has collapsed as well with a -14.2% fall over the period, including all sectors. Manufacturing industry records a 19.9% drop, and construction – on hold – has recorded a 24.1% drop over the quarter (-33.6% compared to 2019). Corporate investment states a 17.8% fall (after a 10.3% fall).
Foreign trade decreased a lot over the period: importations record a 17.3% drop (after -5.5% in the first quarter), especially for goods production, but the fall has been blocked by an even bigger decrease: exportations (-25.5%), especially in transport materials.
Yet, the INSEE warn these first data are estimations and remain fragile, they will be reviewed over the next couples of months. By the way, it says the PIB’s growth forecast in the first quarter of 2020 has been reviewed down (0.6 point) and is now set at -5.9%.
This is the third quarter in a row France’s GDP is decreasing, placing the country in economic recession. The government’s stake is to make agents confident again to relaunch the production-consumption dynamic, especially with a recovery plan of over 100 billion euros. The Insee forecasts a 19% increase for the third quarter of the year and the Banque de France bets on a 14% growth.