French economy: gear change

After a 6.7% surge this year, France’s activity should grow in half in 2022.

Therefore, the ending year will be a (very) good vintage in terms of growth. After the OECD, and the Bank of France, INSEE now bowed to Covid’s very delicate exercises in these eras of economic forecasting.

Bruno Le Mer, Minister of Economy and Finance, is cautiously expecting an increase in activity of at least 6.25%, but the Institute on Verdier Street is again optimistic. Thanks to the ongoing rebound (+ 0.5%) in the fourth quarter, gross domestic product should be 0.4% above pre-crisis levels (quarter 2019 levels).

By doing so, the growth rate in 2021 will reach 6.7%, which is the same as that of the Bank of France, but 0.1 points lower than that of the OECD.

Achievements of growth

Indeed, this figure is “the best over 50 years”, as it pleased the Bank of France Governor François Bilroy de Garhow. But as long as you follow the historic recession of 8% in 2020, you still need to make a forecast. Nevertheless, France does not have to be ashamed of this achievement compared to the major Western countries.

Germany, often presented as a reference, should see only 2.7% progress in its activities, 4.4% in Spain, 5.5% in the United States and 6.5% in Italy. Only the UK is on an equal footing with an interest rate forecast of 6.8%.

According to INSEE, the rebound should continue at a rate of 0.4% in the first quarter and 0.5% in the second quarter of 2022, given the relative maintenance of health restrictions and the slow absorption of supply shortages. is. Expert. “In the spring of 2022, GDP will be 1.4% above pre-crisis levels. Therefore, mid-year growth overhangs, or annual growth observed when GDP stabilizes in the third and fourth quarters. The rate will be 3%. “

This is lower than the government’s forecast (4%).

By this time, France had joined Germany (up 3%), followed by the United States (3.3%), Italy (3.6%), the Commonwealth (3.6%) and Spain (5%).

Inflationary pressure

Among the components of GDP, household consumption will be one of the main drivers. In the first half of 2022, INSEE said, “While returning to pre-crisis levels, business investment that is already above it will slow after a very strong growth in 2021.”

Exports should make significant progress in the second quarter of 2022, thanks to the delivery of large numbers of vessels. Therefore, the unemployment rate will drop to 7.6% of the active population in the first half of 2022.

On the other hand, this is a dark spot, and by keeping the price of the barrel at $ 75 and stabilizing the price of other raw materials, inflation will exceed 2.6% annually within the next six months. Especially for raising prices of industrial products and foods. Energy price contributions are still significant and will decline (from 21.6% for the year November 2021 to 11.8% for June 2022).

This rise in energy prices affects households in many ways. Therefore, the average annual budget for fuel ranges from € 650 in the Paris region to € 1,550 in the municipality.

Ultimately, one thing is clear, even if there are multiple dangers. That is, the activity is more resistant to Covid’s resurrection. And if households utilize wool stockings accumulated during captivity (a wish formed by Bercy’s tenants), consumption may prove to be more dynamic than expected.