The Banque de France is more optimistic than expected for the year 2021. According to the latest report from the institution, the French economy will rebound a little stronger than expected this year, but we will have to wait until the second half of the year to that it materializes.
The French central bank thus raised, Monday, March 15, to 5.5% its growth forecast for France this year, against 5% expected in its previous forecasts in December.
A forecast which therefore approaches the 6% anticipated by the government, and the 5.9% forecast by the OECD.
📊 Macroeconomic projections #France 🇫🇷: the #PIB should increase by 5.5% in 2021, the lower growth in the 1st half of 2021 being offset by the better resilience of the activity at the end of 2020 & by a more dynamic activity in the 2nd half of 2021 👉 https://t.co/C2NAf8DaPw pic.twitter.com/pEK2Lhl4N8
- Bank of France (@banquedefrance) March 16, 2021
French growth should thus be slightly stronger than the average expected for the euro zone this year (+ 4%), after a fall in GDP which was also more brutal in 2020.
"It would be the strongest growth since 1973" and "one of the strongest growth in Europe", even "if there are still many uncertainties", commented Tuesday March 16, the governor of the Bank of France , François Villeroy de Galhau on RTL.
Stable activity in the first half of the year
For the Banque de France, the year 2021 will be cut in two: a first semester with stable activity, the institution assuming a "combination of periods of hardening of measures [of restrictions] and periods of relaxation relative ".
This stability in activity is explained in particular by the fact that companies have adapted to these restrictions, in particular in industry.
The Banque de France thus seems a little less optimistic than INSEE, which expects growth of 1% in the first quarter, then another 1% in the second, by betting on a gradual lifting of restrictions from the second quarter.
For the central bank, we will have to wait until the second half of the year to see this scenario materialize and growth pick up again.
Consumption, investment, stimulated in particular by the stimulus plan, foreign trade: all components of activity will bring about the rebound in the economy, after the record recession of 8.2% recorded last year.
Unemployment rate lower than expected
Household financial savings should thus continue to grow throughout the first half of the year, even if the Banque de France has revised down the savings surplus accumulated by households at the end of the year to 165 billion euros, against 200 billion previously.
Another slight improvement on the employment front, with an unemployment rate which will reach a peak this year, but reassessed at 9.5%, against 10.5% previously forecast.
"There were much less job losses than expected [last year], because companies, thanks to the partial unemployment scheme, kept their employees," explained François Villeroy de Galhau.
The adjustment to the activity shock was thus made more than expected by the number of hours worked rather than by the workforce, ”explains the Banque de France.
No net job creation
However, there should be no net job creation this year, then only 25,000 in 2022, before 125,000 in 2023, she estimates, which means that this high level of unemployment is expected to continue for several years.
After this year of rebound, the recovery of the French economy should continue in 2022 and 2023, with growth of 4% and 2% respectively, bringing France back to the pace of the euro zone as a whole.
"We are seeing a return to the pre-Covid [activity] level in the spring of 2022, it is a little better than what we saw last December when we expected it in the summer of 2022, but we have before us a year of false flat, of slow ascent, "insisted the governor.
However, faced with the uncertainty about the evolution of the epidemic, the Banque de France maintains its two alternative scenarios.
The most favorable remains on a forecast of growth of 7% this year, as in last December.
The most pessimistic, which is based on an accelerated circulation of the epidemic during the year, now shows a growth of 3%, against a contraction of GDP of 1% previously.
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