France’s GDP decline in the first quarter was highest since 1968

US, WASHINGTON (ORDO NEWS) — The French economy entered a recession, although the recession in the first quarter was less dramatic than previously thought.

The eurozone’s second largest economy in January-March contracted 5.3% compared with the previous three-month period, according to the final data of the Insee National Statistical Institute. Preliminary data indicated a drop in GDP of 5.8%.

Although the quarterly drop was less dramatic than originally anticipated, it was still the highest since 1968.

In the fourth quarter of 2019, France’s GDP fell by 0.1%. The decline in the second quarter in a row means a technical recession.

In mid-March, the French government imposed severe restrictions in an attempt to curb the spread of coronavirus. Since May 11, the country began to remove the restrictive measures introduced to combat the pandemic.

Although economic activity is gradually recovering, in the second quarter, according to INSEE estimates, GDP may decline by 20%.

Measures to combat the pandemic, including restrictions on the movement and closure of shops, cafes and restaurants, have led to lower consumer spending, which has traditionally been an engine of growth in France.

At the same time, the household savings rate increased in the first quarter to 19.6%, which has not been observed since the late 1970s.

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