French GDP grew more than expected in the third quarter

According to the report from Insee, in Q3 2020, GDP in volume terms bounced back: +18.7% (revised by +0.4 points compared to the first release) after – 13.8% in Q2 2020. Economists had expected a 18.2% increase. Nevertheless, GDP remained well below the level it had before the health crisis: measured in volume, compared to its level in Q3 2019 (year-on-year change), GDP in Q3 2020 was 3.9% lower (previously estimated at 4.3 % lower). Revisions are mostly due to the integration of new data for September, especially for household consumption and investment in services.

All components of domestic demand rebounded sharply in Q3. Household consumption expenditure increased strongly (+17.9% in Q3, after –11.4%) and approached their pre-crisis level (–1.3% year-on-year), while general government expenditure slightly exceeded it (+0.5% year-on-year). On the other hand, total GFCF remained largely under its pre-crisis level (–4.8% year-on-year), despite its strong rebound in Q3 (+23.9% after –14,5%). Overall, total domestic demand (excluding inventory changes) contributed by +19.5 points to GDP growth this quarter.

Foreign trade also rebounded this quarter, especially exports (+22.1% after –25.1%). Imports on the other hand increased in a less pronounced manner (+16.8% after –16.8%). Overall, foreign trade made a positive contribution to GDP growth: +0.7 points, after –2.3 points in Q2. Finally, changes in inventories contributed negatively to GDP growth (–1.5 points after –0.9 points).