What shape has the economic recovery taken, what is it at present and what will it be in the future? The highly unusual nature of the current crisis cannot be easily summed up by the shape of a letter of the alphabet or some other sign. Whatever the outcome, this shape is bound to be very asymmetrical, because the collapse of the economy was almost instantaneous, coinciding with the introduction of the strict lockdown of the population. The lifting of lockdown, on the other hand, was more gradual and even the well organised lifting of the state of health emergency on 11 July does not mean the end of health protocols aimed at stemming the spread of the virus.

Almost two months after the easing of lockdown began on 11 May, the French economy has picked up fairly significantly. By June, economic activity appeared to have closed three-fifths of the gap that separated it, at the low-point of lockdown, from its pre-crisis level, while household consumption looks set to be only 3 percentage points from its “normal” level. This rebound can certainly be described as “classical”, but this result was not necessarily self-evident just two months ago: there was considerable uncertainty surrounding the easing of lockdown, both in terms of health and in terms of the economy. There were no foregone conclusions, either in terms of controlling the epidemic or regarding the ability of businesses to reorganise so that health protocols were respected, nor in households’ consumption behaviour in the face of serious concerns for their health and for their economic future.

All in all, over the whole of Q2, GDP appears to have dropped by 17% compared to Q1 (after –5.3%). This estimate is unchanged from that given in the previous Point de Conjoncture dated 17 June, but it may still be revised at the end of July, when INSEE publishes the fi rst estimates for the national accounts for this quarter. In fact, Q2 2020 is unprecedented as it combines weeks of lockdown followed by weeks after lockdown was lifted, and estimating “live” the trajectory that the recovery will take is just as complicated an exercise as putting a fi gure on the loss of economic activity linked with lockdown in March.

After Q2, how is the second half of 2020 shaping up? INSEE’s business tendency surveys provide information on companies’ expectations for the next three months. Unsurprisingly, the outlook for production is rallying very sharply: the strength of this rebound is due in large part to the weakness of the starting point, which was economic activity in lockdown. However, industrial companies still do not consider that their order books are well fi lled, especially with international orders, which does not augur well for an immediate return to normal.

The Acemo-Covid survey, conducted by DARES in association with INSEE, provides some details on the pace at which businesses expect to return to normal. Using the responses collected in June, we estimate that activity in December 2020 could be between 1% and 6% short of its pre-crisis level: these figures are significant, and the scale of the interval testifies to the uncertainty that is still felt today, but there is nevertheless no comparison between them and the loss of activity seen in the spring. Taking a median assumption, GDP looks likely to rebound by about 19% in Q3 compared with Q2, then by 3% in Q4. Over the whole of 2020, there is expected to be a decline of about 9% compared with 2019.

Of course, this estimate is subject to many uncertainties, linked above all to the health situation in France and across the world. In particular, if there were to be a second wave of the epidemic in France, this would certainly slow down the recovery, although it is to be hoped that the virus and economic activity can coexist a little more easily than in the spring, thanks to the experience gained throughout this first wave.

Economic activity was in very severe decline during lockdown, but this decline was “deliberate” –the epidemic had become too virulent and had to be stopped. Large-scale measures were adopted to limit the impact of this collapse in activity: in particular, the incomes of most households were fairly well protected, resulting in forced savings which can now sustain consumption. Since May, the first steps towards recovery have been taken fairly quickly, perhaps more quickly than expected. However, it is the next steps that are likely to be the most difficult, mainly because they concern the sectors most severely affected by the crisis, and because there are still worries over world trade, with the epidemic still very active in many countries.