The Insee (National Institute of Statistics and Economic Studies) has published its new forecasts on the increase in the French Gross Domestic Product (GDP). Thus, the latest report published on October 30th, which projected an 18.2% rebound in GDP, has been revised upwards to reach 18.7%.
Insee explains this revaluation of the rebound by the massive return of French household consumption. Households are consuming more, allowing economic activity to resume. During the third quarter of 2020, their consumption increased by 17.9%. In comparison, during the GDP drop in the second quarter of 2020 (-13.8%), consumption had plummeted by 11.4%. However, although consumption is approaching its pre-pandemic level, investment, despite benefiting from a 23.9% rebound, remains 4.8% below its 2019 level.
In its forecasts, Insee notes that with a rebound of 3.7%, the increase in French household incomes in the third quarter is the strongest recorded since 1983. However, despite this rise, incomes remain 1% below their 2019 level. Insee explains this increase by the decrease in the use of short-time work and also by the rebound in employment. The Institute also notes that social benefits “remain at a high level compared to their pre-health crisis level” despite a 6.2% decline in the third quarter.
However, the French economy remains severely weakened by the coronavirus health crisis. The institute specifically points out that the GDP level in the third quarter of 2020 remains “3.9% below its level in the third quarter of 2019”.
