The Insee has published its latest economic report. Unsurprisingly, it aligns with the forecasts of the Banque de France and anticipates a severe recession in 2020 followed by a slower rebound than expected in 2021, mainly due to the ongoing uncertainties surrounding the health crisis: a third wave, vaccine availability…
In its note published on December 15, Insee does not change its forecasts: the French economy will experience a 9% recession in 2020. The Banque de France estimates the same, but Bercy is counting, on its part, on an 11% decline in the economy.
Nevertheless, the rebound will occur, although it will be limited: Insee anticipates that, compared to the end of 2019, growth will remain 5% lower at the end of the first quarter of 2021 and 3% lower at the end of the second. The institution thus forecasts, by the end of June 2021, a growth gain of 6%.
This is a relatively optimistic assumption that remains subject to one parameter: the evolution of the pandemic and its potential stabilization due to the availability of vaccines.
This growth gain is indeed subject to the assumption “of a stabilized and controlled epidemic situation and health restrictions following the announced calendar.” This would mean the reopening of restaurants, for example, on January 20, 2021, as planned, which is far from certain. The cultural sector, which was supposed to reopen on December 15, has already seen this date pushed back to January 7, 2021, at the earliest.
Insee reveals, in its report, that the purchasing power will have nevertheless decreased in France. “The gross disposable income (GDI) of households has significantly contracted following the health crisis and the drop in activity,” the institution writes.
Over the entire year of 2020, the GDI will have increased by only 0.2%, compared to 3.1% in 2019, while consumer prices will have increased by 0.5%. Moreover, this GDI increase is almost exclusively due to social benefits.
Thus, according to Insee, the “purchasing power of GDI” decreases by 0.3% in 2020 (compared to an increase of 2.1% in 2019), which results in the “purchasing power of GDI per consumption unit” dropping by 0.9%.
