The fall is historic, and linked to the two months of confinement which brought France's economic activity to a virtual standstill. The last major drop in GDP was in the second quarter of 1968.
A historic collapse in GDP
This is the biggest drop since the French National Statistics Institute (INSEE) began measuring French economic activity on a quarterly basis. GDP collapsed by 13.8%, household consumption fell by 11%, investments dropped by 17.8% and exports by 25.5%.
Economic activity bottomed out in April, with a gradual recovery in May and June. Households spent more in June than before the coronavirus crisis, with 2.3% more than in February, particularly on manufactured goods.
On the other hand, inflation rose further in July, by 0.8% compared with 0.2% in June. This was due to a weaker fall in energy prices and higher prices for manufactured goods.
A smaller drop in GDP than expected
However, this fall in GDP is less severe than Insee and the specialists were forecasting just a few weeks ago. In May, Insee was forecasting a 20% fall in GDP, and a 17% fall in mid-June.
"It's an expected figure, it's a harsh figure, but it's a less harsh figure than expected," said Bruno Le Maire, the French Minister for the Economy, Finance and Recovery. He declared that the government was "totally determined to do everything [...] to accelerate the national economic recovery and create the jobs that go with it", and added: "If we have growth figures today that are a little less bad than expected, that's proof that political action, public political decision, it's effective."
A long-awaited rebound
The last time GDP fell sharply was in the second quarter of 1968, when it plummeted by 5.3%. At that time, the May general strike shut down 10 million people for 2 weeks, or around half the country's workforce.
The fall was short-lived, however, and was followed by an 8% rebound in the summer. Analysts and statisticians are hoping for a similarly rapid recovery in 2020: Insee estimates +19% for the 3rd quarter.
However, the two crises are not comparable: the commercial sector saw its activity fall by 40% for 2 months, compared with just 2 weeks in May 1968, with some restrictions still in place due to precautionary health measures. What's more, this time the economic crisis was global, weighing on international trade and exports. Finally, the health threat, in the absence of a vaccine, would persist for many months.