The euro zone's second-biggest economy was course to contract 4.4% in the final three months of the year after rebounding 18.7% in the third quarter, when activity surged back more than expected following a first, harsher lockdown.
For the year as a whole, that would leave French gross domestic product 9.1% smaller than in 2019, INSEE said in its latest economic outlook. Both quarterly and full-year forecasts were in line with estimates from two weeks ago.
INSEE's is more upbeat than Finance Ministry, which has built its budget assumptions on forecasts for a 11% downturn this year.
INSEE said economic activity was operating down 8% in December from pre-crisis levels, a slight improvement from the -12% seen in November and the -30% seen in April, during the depths of the first lockdown.
The government imposed a less strict lockdown on Oct. 30 to contain a second wave of coronavirus infections and in recent days has started relaxing some restrictions after case numbers fell.
(Reporting by Leigh Thomas; editing by John Stonestreet)