France’s gross domestic product (GDP) finally fell 0.1% in the first quarter, said Friday, May 28. National Institute of Statistics and Economic Studies (Insee), thus sharply revising its previous estimate of 0.4% growth.
This significant correction is explained by “The integration of data on construction, which is much less dynamic than the extrapolations mobilized during the first estimate”, explains the institute in a press release. Activity in this sector is reduced to + 0.5%, against + 4.2% previously. Investment there was also much lower than what INSEE had initially estimated.
The government expects a strong rebound from the summer
The other components of activity are also revised, but to a lesser extent: household consumption, still strongly constrained by health restrictions at the start of the year, only increased by 0.1% (against 0.3 %), production remained stable (against + 0.4%) and investment only increased by 0.2% (against + 2.2%).
Thus in the first quarter, GDP was still 4.7% below its level at the end of 2019, just before the start of the health crisis.
INSEE also reviewed the extent of the recession in the French economy in 2020: GDP finally fell by 8%, against 8.2% previously estimated.
This revision of the data for the first quarter considerably reduces the growth overhang, which corresponds to the growth that we would have at the end of 2021 if activity remained at the level of the first quarter until the end of the year. It now stands at 3.5%, against 4.1% previously estimated.
The growth target set by the government remains unchanged, said Friday the Minister of the Economy, Bruno Le Maire, on the sidelines of a company visit to Villeneuve-la-Garenne (Hauts-de-Seine). Qualifying this reassessment of “Mechanical overhaul (…) firstly linked to a recession that is less severe than expected in 2020 ”, Mr. The Mayor assured that “This does not change our ambition (…) to have 5% growth in 2021 ”, the government counting on a strong rebound from the summer thanks to the vaccination campaign.
Mr. Le Maire called for “Keep your cool and constancy, do not give in to one number or another, one indicator or another that may fall over the days”, and assured that “The indicators are all well oriented” currently. “Investment is on the right track, business confidence has recovered a lot, household confidence is also gradually recovering, so we have everything to succeed in 2021”, he added. Finally, the minister reiterated:
“The strategic objective that I have set since the start of the crisis, to return in the first quarter of 2022 to the level of economic development that we had before the crisis in 2019.”
In its forecast, the government is slightly less optimistic than the Banque de France (5.5%), the OECD (5.9%) or the European Commission (5.7%).