PARIS (Reuters) – The French economy lurched back into contraction in the final quarter of last year but not as much as expected after the country faced a second coronavirus lockdown, official data released on Friday showed.
The euro zone’s second-biggest economy shrank 1.3% in the final three months of last year after surging 18.5% in the previous quarter, when it staged an unprecedented rebound following a first lockdown, the INSEE statistics agency said.
The result exceeded expectations for a 4% slump on average in a Reuters poll of 28 economists with estimates ranging from -1.4% to -5.3%.
It also meant that for the whole of 2020 the economy contracted 8.3%, better than the -11% the government had forecast in its budget plans.
That is encouraging news for the public finances as the public sector budget deficit is therefore likely to come in at less than the 11.3% of gross domestic product the government had expected.
INSEE said consumer spending surged 23% in December from the previous month as lockdown restrictions were eased heading into the holiday period, which helped to limit the overall fourth-quarter drop in household spending – the traditional motor of the French economy.
Meanwhile, exports surpassed imports so that foreign trade contributed 0.9 percentage points to fourth quarter GDP while inventory building added 0.4 percentage points.
INSEE said that exports of transport goods and pharmaceuticals had held up well in the period while lower economic activity had limited imports of oil.
Reporting by Leigh Thomas; Editing by Jacqueline Wong & Shri Navaratnam