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France GDP contracts 13.8 pct in Q2

Christian Fernsby ▼ | August 29, 2020
France's statistics institute INSEE confirmed on Friday that the country's gross domestic product (GDP) contracted by 13.8 percent in the second quarter (Q2) of this year due to the impact of lockdown measures.
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"The decline in GDP during the first half of 2020 reflects the shutdown of non-essential activities in the context of the lockdown implemented between mid-March and the beginning of May," INSEE said.

Topics: France

The eurozone's second-biggest economy shrank by 5.9 percent in Q1 and by 0.2 percent in the last quarter of 2019, plunging the country into the worst post-war recession.

INSEE also noted that progressive lifting of COVID-19 restrictions had prompted a gradual recovery of economic activity in May and June, after the low point reached in April.

In the second quarter, household expenditure, one of the country's key growth engine, dropped 11.5 percent mainly due to a fall in services and engineered products as anti-coronavirus confinement left shops closed and consumers hunkered down at home.

Exports dropped 25.0 percent in Q2 after a 6.0-percent fall in the first quarter, more significantly than imports, which decreased 16.4 percent after a 5.6-percent drop. Overall, foreign trade balance contributed negatively to GDP growth.

The public deficit widened by 6.4 percentage points to 11.6 percent of the GDP. INSEE attributed this deterioration to the 9.3-percent drop in revenue due to reduced economic activities which generated lower receipts of VAT and income tax.

For the full-year budget gap, the French government expected the deficit to be at 11.4 percent of the GDP, the country's worst post-war downturn.