French GDP fell less than expected in the 4th quarter

According to the report from Insee, in Q4 2020, GDP in volume terms fell back: –1.3% after +18.5% in Q3 2020. Economists had expected a 4.0% decrease. The loss of activity this quarter was marked by the lockdown in effect from the end of October to mid-December and by the curfews put in place during the months of October and December. Nevertheless, the total loss of activity was much more moderate than during the first lockdown in March-May 2020: in Q4 2020, GDP was 5.0% below its level a year earlier (year-on-year change), whereas the year-on-year decline was of 18.8% in the second quarter. Over the full year 2020, GDP fell sharply (–8.3%, after +1.5% in 2019).

The effects of the second lockdown were mainly reflected in household consumption expenditure, which fell back sharply (–5.4% in Q4 after +18.2% in the previous quarter). On the other hand, gross fixed capital formation (GFCF) continued its recovery (+2.4% after +24.0%). Overall, total domestic demand (excluding changes in inventories) fell again, contributing – 2.7 points to GDP growth this quarter after +19.4 points in the previous quarter.

Foreign trade also pursued its recovery. For the second quarter in a row, exports increased more than imports (+4.8% after +21.9% for exports and +1.3% after +16.2% for imports). Overall, the foreign trade made a positive contribution to GDP growth this quarter: +0.9 points, after +0.8 points in Q3 2020. Finally, changes in inventories made a positive contribution to GDP growth (+0.4 points after – 1.7 points).