The French economy contracted by a post-war record of 13.8% in the second quarter, as consumption, investment and trade all collapsed under a lockdown imposed to contain the COVID-19 pandemic, although the drop was shallower than expected.
The contraction in the euro zone's second-largest economy was steeper than the 10.1% reported by Germany, where authorities kept a surge in COVID-19 related deaths in check and did not have to enforce a lockdown as strict as France's. The French lockdown was stringently enforced until May 11, with non-essential shops shut down, and gradually lifted over the course of the second quarter, with cafes and restaurants being allowed to open on June 2.
The contraction was not as severe, however, as the 17% predicted earlier this month by national statistics office INSEE and the 15.3% reduction pencilled in by analysts polled by Reuters. "Not too bad!" tweeted Allianz chief economist Ludovic Subran. "We were expecting -16% but deconfinement saved the day."
INSEE also revised down to 5.9% from 5.3% the drop in gross domestic output in the first quarter, which included about a fortnight of lockdown, which was imposed on March 17. That was the third consecutive decline in GDP, in a recession that started in the fourth quarter of last year, when nationwide strikes shaved 0.2% off national output.
INSEE said earlier this year it expected the economy to rebound by 19% in the third quarter and a further 3% in the fourth quarter, with activity 1% to 6% below pre-crisis levels by December. Friday's data showed household consumption dropped by 11%, company investment 17.8%, exports by 25.5% and imports by 17.3%.
The drop in the construction sector was particularly steep, INSEE said, with a 24.1% plunge. Analysts have mentioned the paralysis in the French construction sector as one difference that explains the better performance in Germany, where construction sites stayed open through lockdown.