France GDP shrank by 13.8% in second quarter

According to the report from INSEE, in Q2 2020, GDP in volume terms declined: –13.8%, after –5.9% in Q1 2020. It is 19% lower than in Q2 2019. GDP’s negative developments in first half of 2020 is linked to the shut-down of “non-essential” activities in the context of the implementation of the lockdown between mid-March and the beginning of May. The gradual ending of restrictions led to a gradual recovery of economic activity in May and June, after the low point reached in April.

Household consumption expenditures dropped (–11.0% after –5.8%), as did total gross fixed capital formation in a more pronounced manner (GFCF: –17.8% after –10.3%). General government expenditure also stepped back (–8.0% after –3.5%). Overall, final domestic demand excluding inventory changes fell sharply: it contributed to –12.0 points to GDP growth.

Exports fell this quarter (–25.5% after –6.1%) more strongly than imports (–17.3% after –5.5%). All in all, the foreign trade balance contributed negatively to GDP growth: –2.3 points, after –0.1 points the previous quarter. Conversely, changes in inventories contributed positively to GDP growth (+0.6 points).

Overall production of goods and services declined sharply (–14.2% after –5.5%). It fell the hardest in construction (–24.1% after –12.8%). Output in goods also declined (–16.8% after –5.6%) as output in market services (–13.4% after –5.0%).

Household consumption dropped in Q2 2020 (–11.0% after –5.8%), more in services (–15.3% after –5.8%) than in goods (–7.1% after –6.8%). With regards to goods, consumption of engineered goods fell strongly (–12.0% after –16.0%) and expenditure on energy declined markedly (–11.1% after –3.7%) notably due to the heavy decline in fuel purchases, related to the lockdown. Food expenditure slightly decreased (–0.5% after +2.8%). With regards to services, expenditure on transport services (−45.8% après −13.1%) and accommodation and food services (–56.9% après –16.5%) plummeted, linked to the administrative restrictions enforced to fight the pandemic.