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French GDP dropped 5.3% in the first quarter, a record

2020-05-29T20:39:57.151Z


Fall should be much worse in second quarterLess pronounced than previously estimated, but still a record: the fall in GDP reached 5.3% in the first quarter, marked by the start of containment to fight the Covid-19 epidemic and before the plunge expected in the second quarter . INSEE, which at the end of April estimated the fall in gross domestic product in the first quarter at 5.8%, revised on Friday the extent of the decline in the Frenc...


Less pronounced than previously estimated, but still a record: the fall in GDP reached 5.3% in the first quarter, marked by the start of containment to fight the Covid-19 epidemic and before the plunge expected in the second quarter .

INSEE, which at the end of April estimated the fall in gross domestic product in the first quarter at 5.8%, revised on Friday the extent of the decline in the French economy, ultimately a little less dramatic than calculated at the start.

Also read: "Dare to stand out, dare to consume", asks Muriel Pénicaud

At -5.3%, the fall in GDP nevertheless equaled that recorded during the second quarter of 1968, marked by the massive strikes of the second half of May.

And it confirms France's entry into recession, after the -0.1% decline in activity in the last quarter of 2019, even if over the whole of last year the economy finally slowed down less, with GDP growth of 1.5%, according to a new estimate from INSEE published on Friday.

In detail, in the first quarter, according to new estimates from INSEE, all components of the economy finally fell a little less than assessed during its first estimate.

Household consumption expenditure experienced an "unprecedented decline" of 5.6%, when the Institute first assessed them down by 6.1%.

Situation expected to worsen in second quarter

The same is true for business investment (-10.5%) or for the evaluation of exports (-6.1%) and imports (-5.7%). The foreign trade balance ultimately had zero impact on GDP in the first quarter.

But the situation should worsen considerably in the second quarter, with a month and a half of confinement and a gradual start to deconfinement since May 11.

INSEE has already warned on Wednesday that it expects the French economy to plummet by around 20% in the second quarter. And the recession will largely exceed the 8% decline in GDP planned by the government this year.

The latter should also unveil his new forecast in a third amending budget, which will be presented on June 10 in the Council of Ministers.

"I have always indicated that the 8% drop in growth was a provisional figure (...) We must expect very degraded recession figures for 2020 in France", warned the Minister of Economy Bruno on Wednesday The mayor.

First warning sign: household consumption fell by a third in April compared to February, just before the health crisis, and by more than 20% compared to March, said Friday INSEE.

And household morale deteriorated further in May after its record drop in April.

Only small clarification: the business climate stopped its fall in May, encouraged by the start of deconfinement which allowed most companies to resume their activity and businesses to welcome new customers in store.

Source: lefigaro

All news articles on 2020-05-29

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