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GDP down 8.3% in 2020

Published February 01, 2021 - 2 mins reading time
Bank watch
According to an initial estimate by Insee, GDP plunged by 8.3% over the full year 2020, with a 1.3% decline in the fourth quarter due to reconfinement. This massive recession is still slightly below the initial forecast by Insee, which had anticipated a decline in GDP of around 9%.

Second containment: less impact than the first

According to the Insee estimate published on January 29, the economic downturn that lasted from the end of October to mid-December 2020 weighed less heavily on the economy than that of the spring. While GDP was down 18.8% in the second quarter of 2020 compared with 2019, the decline was only 5% in the fourth quarter.

Foreign trade has hardly been disrupted by this second confinement: exports continue to outpace imports, and the sector contributes 0.9 points to GDP growth.

The same cannot be said of household consumption, which again fell sharply, with spending down 5.4% in the fourth quarter after rising 18.2% in the third.

The fall in household consumption is due to the administrative closures of many businesses, and mainly concerns manufactured goods and services, in contrast to spending on foodstuffs, which rose slightly.

In the end, while household consumption had almost returned to its 2019 level in the third quarter, with a decline of 1.1%, it drifted away from it again in the fourth quarter, recording a decline of 6.8%. For 2020 as a whole, it fell by 7.1%, after rising by 1.5% in 2019.

Moderate decline in total production

With a fall of 0.7%, total production, which includes both goods and services, slowed moderately. The reconfiguration had relatively little impact on manufacturing, which saw a 2.3% increase in goods production in the fourth quarter, compared with +19% in the third quarter.

Market services, on the other hand, were hard hit, recording a 2.2% decline in the fourth quarter, following a 15.6% increase in output in the third quarter. The decline in output was less marked in non-market services: -0.5% in the fourth quarter of 2020, compared with +17.4% in the third quarter.

Goods production continues to recover slowly, falling by 4.6% year-on-year in Q4 2019, compared with a year-on-year decline of 8.2% in Q3. Services production, meanwhile, continues to distance itself from its 2019 level: it fell by 3.4% in the third quarter, and by 5% in the fourth quarter.