In Q2 2020, real gross domestic product (GDP)* fell sharply: -13.8% after -5.9% in the previous quarter. The decline in GDP during the first half of 2020 reflects the shutdown of “non-essential” activities in the context of the lockdown implemented between mid-March and the beginning of May. The progressive lifting of these restrictions led to a gradual recovery of economic activity in May and June, after the low point reached in April.

Household consumption expenditure dropped (-11.5% after -5.8%), as did total gross fixed capital formation (GFCF) to a greater extent (-14.9% after -10.0%). General government consumption expenditure also decreased (-10.3% after -3.3%). All in all, total domestic demand excluding changes in inventories fell sharply: it contributed -12.2 points to GDP growth.

Exports once more dropped more significantly (-25.0% after -6.0%) than imports (-16.4% after -5.6%) this quarter. Overall, foreign trade balance contributed negatively to GDP growth: -2.5 points after -0.1 points in the previous quarter. Conversely, changes in inventories contributed positively to GDP growth (+0.9 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 markedly (-2.3% after -0.3%, its largest quaterly decrease since 1949). With the extension of the partial activity scheme and the decrease in employment, wages received by households fell sharply (-10.0% after -2.4%). Furthermore, interests and dividends dropped again (-2.9% after -3.7%). This decrease in revenue was however substantially offset by the acceleration of social benefits in cash (+7.9% after +2.3%). This increase is partly due to the payment of partial activity benefits and exceptional solidarity benefits to the most vulnerable households in the context of health emergency, as well as benefits for unemployment and furlough for childcare. Taxes on income and wealth also fell (-8.9% after -2.3%, mainly the social security contribution (CSG) and the income tax). Likewise, social contributions paid by households decreased (-7.3% after -1.7%), due to the decline of labour income.

Household consumption prices declined for the first time since 2017 (-0.2% after +0.2%). Overall, household purchasing power decreased more this quarter: -2.1% after -0.5%. Measured by consumption unit to bring it to an individual level, it dropped by -2.3% (after -0.6%). Meanwhile, household consumption fell markedly (-11.5% after -5.8%), resulting in a sharp rise of the savings rate to 27.4% after 19.7% in Q1 2020 and an average of 14.9% in 2019.

Furthermore, the total amount of hours worked dropped by 15.5% in Q2 (after -4.2%) following the rise in the use of partial unemployment, and to a lesser extent the decrease in employment and over-time hours.

In Q2 2020, non-financial corporations’ profit ratio (NFCs) fell again. It stood at 26.0% after 29.2%, a decline of 3.2 points after -4.2 points in Q1. The decrease of NFCs’ value added in Q2 (-17.4%) is indeed only partially offset by the decrease of the wage bill and social contributions. Moreover, the end of the Competitiveness and employment tax credit (CICE) in 2020 had contributed negatively to this ratio in Q1.

In Q2 2020, public deficit increased by 6.4 points, to 11.6% of the GDP after 5.2% in the previous quarter. This deterioration is mostly due to the drop in revenue (-9.3% after -3.4%), which followed the decrease in economic activity (lower amounts owed in VAT, income tax, corporate tax and social contributions, as the deferments are not taken into account in this decline, see methodological note). Meanwhile, government expenditure rebounded slightly (+0.4% after -1.0%); the spending on social benefits and subsidies (solidarity fund) rose significantly, but this increase was weighed down by the effects of lockdown: decrease of in-kind transfers, intermediate public consumption and public investment.

The GDP growth estimate for Q2 2020 is confirmed at -13.8%. Revisions in the different aggregates offset each other: they are mainly due to the update and revision of indicators.

Within the framework of the notification of the public debt and deficit to the European commission, the annual accounts are updated each year at the end of August, to take into account the final accounting data of the social security administration, which are not available for the April 1st notification. Additionally some revisions updated the public administration account. The tables of the annual accounts of public finances have been updated and are available at the following link. The quarterly accounts are aligned with this new data.