France: Conditional economic recovery

Eddy recommendation. It is dangerous to try to analyze the situation when the situation is likely to change. INSEE has titled a quarterly note published in mid-December, as it was promised that epidemic control would become increasingly difficult. “Recovery under constraints”.. The recovery at the end of 2021 is very clear. Activity increased by 3% between July and September. This is an exceptional quarterly figure, driven by household consumption, which increased by 4.9%. Vaccination campaigns that have allowed us to survive the fourth epidemic wave without incident during the summer also bring about increased public consumption as the country purchases the tools needed to measure and reduce pandemics. I did. Moreover, “Even part of international tourism has endorsed the dynamism of exports.”Write conjuncturists.

Still in progress when INSEE wrote its memo, household consumption, in the fourth quarter of 2021 “It will slow down after a sharp catch-up in the previous quarter.”.. Consumers continued to enjoy food, travel and entertainment, but the decline in car sales seems to have eased their thirst for electronics. Until November, business leaders’ business trend surveys “Business environment”, Reflected a particular optimism. The manufacturing, construction and service industries have reached their highest levels since the summer of 2017. As a result, like the Bank of France, the 2021 INSEE forecast is a 6.7% growth following the 8% recession in 2020.

Economic analysts predict that the recovery will continue in early 2022. “Are doing Assuming that health restrictions are no more stringent on this horizon. “ They all specified the same. Conditional use often protects authors of situational notes from danger. Household consumption should be at good levels, driven by the most damaged sectors since March 2020. INSEE estimates a growth overhang of 3, which is defined as the annual growth rate observed when GDP stabilizes in the third and fourth quarters. 2022%. This completely eliminates the effects of the pandemic.

Difficulty of supply and recruitment

After recovery, there are some order constraints here. Of course, economic forecasters did not know at the time of writing the note how the fifth wave of the pandemic and the expansion of Omicron variants would proceed. On the other hand, supply difficulties were much more predictable. According to the Business Trends Survey, the first signs of a shortage appeared in the transportation equipment sector in the spring of 2021 and at the end of the year affected most of the economy of both agricultural and household goods, equipment or buildings. Fear of business leaders at the end of 2021 “At a level not reached since 1991”Is also reflected in the trade of industrial products, both exports and imports. In Europe, France is less affected than Germany, but more affected than Spain and Italy.

Employers also point out the difficulty of hiring and retaining employees.In service, 20% of companies “Lack of human resources as a factor limiting production”, And this ratio doubles in construction.Them “Difficulty of supply” feed “Tension of selling price”, Indicates INSEE. At the end of 2021, the percentage of manufacturers expecting price increases exceeded the historical record since 2011. Rising prices will once again affect all Western countries, including the United States. In France “The year-on-year price, which was zero in December 2020, reached 2.8% at the end of November 2021.” Indicates INSEE.

The reason for this inflation is well known. For the past few months, “Global goods demand is recovering strongly, but supply is still restrained,” he said. Inflation should remain at this level in early 2022 if commodity prices are stable. As prices rise, the weight of food and industrial products should also tend to increase. This subject has been identified as being particularly sensitive in government. From the end of October “Inflation allowance” One of the 100 euros paid to those who receive a net amount of less than 2,000 euros per month is recorded. At the beginning of 2022, the minimum wage was revalued to 1, so salaries should continue to increase.er Not only in January, there are also internal negotiations where hiring difficulties and inflation turn to a scale that favors employees.

If you are afraid that the executive branch will be punished, during the next election, because of purchasing power, it can take advantage of good results in terms of unemployment on the one hand. INSEE suggests that the stable unemployment rate at 8.1% of the active population in the third quarter of 2021 should drop further in early 2022 to 7.6% in June. The unemployment rate peaked at the end of 2015, at almost 10.5%.

Finally, economic forecasters point out that the French economy still has reserves, which are the reserves of savings accumulated during captivity. The savings rate, which has been declining since spring, is still 16%, one point above the level that was stagnant before 2020.