According to the report from INSEE, 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. Economists had expected a 5.8% decrease.
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).
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.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2021 Teletrade-DJ International Consulting Ltd
Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.