Slight improvement in activity in December in France but no progress expected in January

Despite this slight improvement in December compared to its previous estimate of -8%, the French central bank confirmed its forecast of a GDP decline of 4% in the last quarter of 2020 and 9% for the whole year. 2020, according to its monthly economic survey.

In the context of the end of the second confinement in mid-December, with in particular a reopening of shops, "activity has partially recovered" in December, details the Banque de France which relies on the returns of 8.500 companies.

The improvement mainly concerned services, then to a lesser extent industry, while activity remained stable in construction, these two sectors having been less penalized by confinement, details the Banque de France.

But disparities persist within each segment, since while the situation is better in the chemical or food industry, it remains "degraded" in the automobile, aeronautics and other transport sectors.

Unsurprisingly, in services, accommodation and food services continue to suffer, when most other activities are progressing again with the lifting of containment and the end of year holiday period conducive to trade or transport services.

But this improvement should mark a halt in January, warns the central bank, with activity "almost stable" in industry, construction and services, according to business leaders interviewed between December 21 and 7 last january.

The Banque de France is thus counting for January on activity still below 7% of its pre-crisis level, as in December, due to the maintenance and even the strengthening of measures to fight the Covid-19 epidemic. .

"January should mark a plateau, but conversely we do not expect the hourly tightening of the curfew in certain departments to have a significant economic cost this month", underlined the Governor of the Banque de France, François Villeroy de Galhau, before the Finance Committee of the National Assembly.

But this anticipation "must be interpreted with caution because it can mask a lack of visibility, given the great uncertainty about the evolution of the epidemic", warns the Banque de France.

The development of the activity will ultimately depend on the adaptation of the measures taken by the government, while the defense council which is being held on Wednesday could approve new restrictions, including an extension of the curfew.

Activity should therefore remain 6% below its pre-crisis level during the first quarter, according to the latest forecasts from the Banque de France published in mid-December.

The governor confirmed Wednesday morning the forecast of a GDP rebound of 5% this year, a little less than the forecast of 6% established by the government.