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The French GDP collapsed by 13.8% in the second quarter

Insee announced on Friday morning a historic fall of the GDP of France in the second quarter. A figure enters the annals as an all-time record. The GDP of Fran

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The French GDP collapsed by 13.8% in the second quarter

Insee announced on Friday morning a historic fall of the GDP of France in the second quarter. A figure enters the annals as an all-time record.

The GDP of France is experiencing a dip historic 13.8% in the second quarter, according to figures released by Insee on Friday morning. Since it measures the economic activity of French quarterly, never to the national statistics Institute had recorded such a collapse. It has also revised its measure of activity in the first quarter, which fell to 5.9%, instead of 5.3% reported previously.

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The drop in activity in the second quarter, however, is less than that anticipated most of the analysts and the Insee itself, which judged it to be still at 17% in the month of June.

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In detail, the household consumption, the main component of growth, fell by 11%, the investment of 17.8%, exports of 25.5%. "The negative evolution of GDP in the first half of 2020 is linked to the cessation of activities 'non-essential' in the context of containment put in place between mid-march and early may," says the institute in a press release. "The gradual lifting of restrictions led to a gradual recovery in economic activity in the months of may and June, after the low point reached in April," says Insee.

The highest quarterly decline of GDP before the crisis of the sars coronavirus was recorded in the second quarter of 1968, affected by the general strike in may, but that had been followed by a rebound of +8% in the summer. The rise should this time be all the more vigorous that the downward spiral was abysmal: the Insee is expected to +19% for the third quarter, Natixis +16% and the Bank of France +14%.

"recovery dynamic"

Several indicators published last week reinforces the idea of a strong revival. Private sector activity has recovered sharply in July, especially in services, according to an indicator provisional published by the firm Markit. According to the consulting firm, BCG, France would experience the same "recovery is the most strong of Europe".

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"In may and June, it is the consumer that has bounced off the activity, the investment is not at all", is his side Philippe Waechter, director of research at Ostrum Asset Management. "There is a component that bounces strongly, it is the consumption of households" is also Arno Fountain.

And yet, the moral of these same households, who had started to recover in June after the déconfinement, dipped again in July, reported Wednesday the Insee. And if the consumer has on the whole recovered well, the start of sales was "little momentum", noted the federation Procos of the specialized trade.

As a result, the share of French considers that it is appropriate to save increases for the third consecutive month, according to the Insee, and then the mobilisation of 100 billion euros of savings planned this year will play a decisive role in the recovery.

Problems side jobs

Side business, "there are greater difficulties, of course, for the investment", because they "have acquired a lot of debt during the confinement period," notes Arno Fountain.

"The companies have levels of activity that are very low and the uncertainty is very strong, they have no desire to invest", also notes Waechter. "This is the key element of the next month, and associated with this, their behavior on the job," emphasizes the economist.

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"I continue to believe that the worst is ahead of us" in terms of jobs and bankruptcy, said Tuesday the Economy minister Bruno Le Maire said before the economic Affairs commission of the national Assembly. Therefore, the government, he refused for the moment to revise its forecast of GDP decline for the year 2020, that figure is at 11%, while the Insee is expected to 9 percent.

Read our complete file

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the situation on The job front looks particularly complicated with the arrival of 700 000 young people on the labour market re-entry, and a risk of multiplication of bankruptcies and social plans with the arrest of a number of aid measures, including the partial unemployment for most of the sectors.

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