Almost exactly three months ago, on 17 March, a large section of the French economy was deliberately brought to a standstill in an attempt to curb the particularly virulent Covid-19 epidemic. Since 11 May the epidemic has started to ebb, allowing the lockdown to be lifted gradually. In the very short term, the evolving health situation will condition the speed of economic recovery, in much the same way that it precipitated the crisis in the first place.

As things stand, the epidemic is continuing to taper off, leading to an acceleration of the lockdown easing measures. We therefore revise our quarterly estimate of French GDP upwards for Q2 2020, to –17% (against –20% in the 27 May Point de conjoncture, and after –5.3% in Q1). More specifically, the latest available indicators point to a loss of economic activity compared to “normal” of 29% in April then 22% in May, and the figure should be limited to 12% in June.

This upward revision is bolstered by the availability of new “hard” indicators for April 2020, which have refined the snapshot of the French economy initially given by INSEE based on “high-frequency” data and direct feedback from businesses and professional federations. In April, both industrial output and household consumption of goods were around one-third below their pre-crisis level, an order of magnitude that was anticipated in our Points de conjoncture. Services to businesses, however, appear to have suffered slightly smaller losses than the information at our disposal had led us to believe. At present, the various high-frequency data are painting a contrasting picture of the shape of the recovery. This is because not all indicators are returning to normal in the same way – and some will probably not return for a while yet. At the end of May for example, while economic activity was estimated to be one-fifth below its pre-crisis level, daily commutes calculated using mobile phone data were 40% down on their pre-lockdown level.

Aggregated bank card transactions, combined with scanner data sent by certain supermarket chains, provide information on household consumption almost in real time. The post-11 May rebound was particularly strong (down just 7% compared to the pre-crisis level, against –31% in April). The new data available for recent weeks suggest that this rebound is set to last, with consumption expected to be down just 5% in June.

The economy has thus recovered sharply since mid-May, after a month of April that will go down as one of the worst the French economy has seen in peacetime. This recovery is being boosted by various measures (short-time working, solidarity funds for micro-enterprises, the self-employed and micro-entrepreneurs, etc.) put in place to help households and enterprises to get through lockdown: the economy was temporarily put “under anaesthetic”, as we described in April, but in conditions that have allowed it to reawaken. Uncertainties are therefore easing in the short term. However, this observation does not allow us to predict exactly when the economy will have fully returned to its pre-crisis level. The effects of the shock have varied widely from sector to sector: for those that have been hit hard (e.g. air transport, automotive), the scars will probably be deeper than for others. Generally speaking, the impacts of the health protocols on labour productivity are yet to be evaluated. And questions remain about the future investment behaviour of businesses, as well as about household consumption. During lockdown, households necessarily built up their savings, but they may yet be tempted to play at wait-and-see, either on grounds of prudence about the health situation or as an economic precaution, amid rising fears over unemployment after the loss of half a million jobs in Q1. Lastly, the international environment is likely to remain uncertain for a long time yet, particularly as the threat of a second wave of the epidemic hovers over certain countries, including China.