We already know that the INSEE figure will remain in its annals as an absolute record since the Institute began to compile this benchmark indicator in 1949.

INSEE will quantify this Friday the extent of the vertiginous decline in activity in France in the second quarter, when the economy is picking up but faces a lack of household confidence.

In its latest forecast in mid-June, the National Institute of Statistics estimated the plunge at 17% compared to the previous quarter, while the Banque de France estimated it at 14% in early July over the same period and that the consensus of analysts at Factset is 15.3%. The main reason for this collapse: six weeks of confinement in April and May, after two in March which had already caused GDP to fall by 5.3% in the first quarter.

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Even today, “it’s hard to gauge what exactly the loss of activity will be because we are in a very unstable climate,” explains Arno Fontaine, France economist at Natixis, who forecasts a plunge of between 15% and 16%.

Be that as it may, the INSEE figure will remain in its annals as an absolute record since the Institute began compiling this benchmark indicator in 1949.

The two strongest quarterly declines in GDP had so far been recorded in the first quarter of 2020 and the second quarter of 1968, affected at the time by the general strike in May, but which had been followed by a rebound of + 8% in January. ‘summer. The rise should this time be all the more vigorous as the plummet was abysmal: Insee forecasts + 19% for the third quarter, Natixis + 16% and the Banque de France + 14%.

A “dynamic recovery”

Several indicators published last week support the idea of ​​a dynamic recovery. The activity of the private sector thus recovered sharply in July, in particular in services, according to a provisional indicator published by the firm Markit. According to the consulting firm BCG, France would even experience “the strongest recovery in Europe”.

INSEE also reported renewed confidence in July among business leaders, who consider the business outlook good in most sectors.

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“In May and June, it is consumption that rebounded activity, investment not at all,” notes Philippe Waechter, director of research at Ostrum Asset Management. “There is a component which is rebounding strongly, it is household consumption”, also notes Arno Fontaine.

And yet, the morale of these same households, which had started to recover in June following deconfinement, fell again in July, INSEE reported on Wednesday. And if consumption has generally recovered well, the start of sales was “sluggish”, noted the Procos federation of specialized trade.

As a result, the share of French people who believe it is appropriate to save is increasing for the third consecutive month, according to INSEE, and while the mobilization of the 100 billion euros in additional savings planned for this year will play a role. a decisive role in the recovery.

Difficulties in terms of jobs

On the business side, “there are of course more difficulties for the investment”, because “they have acquired a lot of debt during the period of confinement”, notes Arno Fontaine.

“Companies have very low levels of activity and the uncertainty is very high, they have no desire to invest,” also notes Waechter. “This is the key element in the coming months, and associated with that, their behavior on employment,” said this economist.

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“I continue to believe that the hardest part is ahead of us” in terms of jobs and bankruptcies, for his part said Tuesday the Minister of the Economy Bruno Le Maire before the Economic Affairs Committee of the National Assembly. So the government refuses for the moment to review its forecast of GDP decline for the year 2020, which it figures at 11%, while INSEE expects only 9%.

The situation on the employment front looks particularly complicated with the arrival of 700,000 young people on the labor market at the start of the school year and a risk of multiplication of bankruptcies and social plans with the end of a certain number of aid measures, including partial unemployment for most sectors.