INSEE released updated economic forecasts for the year that see a strong 19 percent rebound in gross domestic product in the quarter that begins in July and then a small increase in the fourth quarter.
Nevertheless, with the output lost during the lockdown that stretched from March into May, the French economy is heading for a nine percent drop for the year, “the strongest contraction since national accounts began to be compiled in 1948”.
That forecast is nevertheless more optimistic than the French government's prediction of 11 percent, the French central bank's 10 percent, and the European Commission's 10.6 percent.
INSEE noted, however, that given the uncertainty about the evolution of the health situation as well further impacts on the economy, the forecasts should be considered with caution.
The statistics office surveyed some 38,000 companies in the first half of June about when they expect their business activity to return to pre-crisis levels. And these showed France's economy could recover most of the lost ground by the end of the year.
Under the central scenario, economic activity will have returned to a level of around four percent below normal at the end of the year.
Under the optimistic scenario, economic activity may be down around just two percent.
When the French economy was under lockdown for the entire month of April, economic activity was down an estimated 30 percent. INSEE says that around three-fifths of that drop had been recovered in June.
The pessimistic scenario has French economic activity six percent below normal at the end of the year.
INSEE said the “strength of the rebound is to a large extent a reflection of the weakness of the point of departure, that is to say the level of economic activity during the lockdown period.”
It said the measures the government adopted to support workers staying on payrolls has apparently helped facilitate facilitate the quick recovery, but pointed to industrial firms reporting weak orders, especially from international clients.
“This does not augur well for an immediate return to normal,” said INSEE.