PARIS, May 28 (Reuters) – France, the euro area’s second-largest economy, entered recession in the first quarter of 2021 with a 0.1% contraction, revised official data showed on Friday.
The statistics institute of INSEE revised its GDP down sharply by + 0.4%, estimating that the data for the construction sector were much weaker than its extrapolation had suggested.
It follows a 1.5% contraction in the last three months of 2020.
A half-percentage point revision is highly unusual in France and highlights the challenges governments have faced in responding to the coronavirus pandemic as it shakes economies around the world.
Another sign of difficulties, household spending, the engine of economic activity in France, fell 8.3% in the first month of the second quarter after President Emmanuel Macron ordered a third national COVID-19 lockdown.
This stay-at-home order is now slowly being unwound. Finance Minister Bruno Le Maire stuck to his 5% growth forecast for 2021 on Thursday and said the crisis “was passing behind us, although we must remain cautious”.
GDP for 2020 was slightly better than expected at -8.0% against a previous estimate of -8.2%, according to INSEE.
The statistical agency also confirmed that the government deficit stood at 9.2% of GDP last year. (Reporting by Richard Lough; editing by John Stonestreet)