29 May 2020

2020- n° 134

In Q1 2020, household gross disposable income held steady and their savings jumped despite the 5.3% drop in GDP. Quarterly national accounts - detailed figures - first quarter 2020

In Q1 2020, real gross domestic product (GDP)* fell sharply: -5.3% after -0.1% in Q4 2019, thus a revision of +0.5% compared with the first estimate published in April.

Household consumption expenditure recorded an unprecedented drop (-5.6% after +0.3%). Total gross fixed capital formation (GFCF) fell even more sharply (-10.5% after +0.1%). All in all, total domestic demand (excluding changes in inventories) contracted: it contributed -6.0 points to GDP growth.

Imports fell (-5.7% after -0.7%), but less sharply than exports which fell by 6.1% (after -0.4% in Q4 2019). Overall, the contribution of foreign trade balance to GDP growth was zero, after +0.1 points in the previous quarter. Conversely, changes in inventories contributed positively to GDP growth (+0.6 points after -0.5 points).

* Volumes are measured at chain-linked and seasonally and working-day adjusted prices of the previous year (seasonally and working-day adjusted).

Household gross disposable income (GDI) decreased slightly (-0.1% after +0.9%): the decrease in value added produced by sole proprietors was partly offset by subsidies from the solidarity fund, so that their mixed income fell by 1.0%. With the recourse to the partial activity scheme, the wage bill received by households fell sharply (-1.8% after +0.7%), which was offset by a strong acceleration in social benefits in cash (+2.8% after +0.4%). Taxes on income and wealth fell (-1.5% after -2.9%): despite the technical rebound following the reduction in housing tax at the end of 2019, the reform of the income tax scale and the adjustment of taxes to the fall in income received supported disposable income. In addition, social contributions paid by households fell (-1.4% after +0.9%) with the decline in the wage bill.

Household consumption prices continued to increase (+0.3% after +0.2%). Overall, the decline in purchasing power of household GDI remained limited (-0.4% after +0.7%) given the scale of the fall in activity. Measured by consumption unit to bring it to an individual level, it fell by -0.5% (after +0.5%). At the same time, household consumption fell (-5.6% after +0.3%), resulting in a sharp rise of the saving rate to 19.6% after 15.1% in Q4 2019.

In Q1 2020, non-financial corporation profit ratio (NFCs) fell sharply and reached its low point in 2013. It stood at 29.4% after 33.5%, a decline of 4.1 points. This decline was mainly due to the fall in value added in Q1 and the end of the Competitiveness and employment tax credit (CICE) in 2020. Nevertheless, the decline in the wage bill and related social contributions reduced this decline.

In Q1 2020 the public deficit increased by 1.1 points: 4.8% of GDP after 3.7% in Q4 2019. Revenues continued to decline (-2.4% after -1.2%): the income tax cut came into effect in 2020, to which are added reductions in tax revenues linked to the decline in economic activity (decrease of the due amounts of VAT, income taxes, corporate taxes and social contributions, while the delay granted in tax and contributions payment are not recorded, see methodological note). At the same time, government expenditures fell (-0.5% after +0.6%), with the end of the CICE and the decline in investment expenditure and despite the increase in social benefits paid.

GDP growth in Q1 2020 was revised upwards by 0.5 points compared to the first estimate. This unusually large revision was due to the replacement of estimates for March, which were heavily affected by the lockdown measures, by the usual indicators, particularly in transport services and investment in services. In addition, a larger revision compared to the previous estimate is typical at this time of year: it results from the benchmarking on the annual accounts revised on years 2017 to 2019 and from the updates of seasonal and working day adjustments as well as various methodological improvements.