France’s economy is expected to rebound faster than previously expected in 2021 on strong consumer spending and business investment, the country’s central bank said on Monday.
“French economic activity is experiencing a strong rebound in 2021. Following the start of the year marked by ongoing public health restrictions, the phased lifting of the lockdown and acceleration of the vaccination campaign should allow the economy to recover in earnest in the second half,” the Bank of France (BdF) said.
In its quarterly economic outlook, BdF raised this year’s growth estimate by 0.4 percentage points to 5.8 percent, well above the eurozone’s average of 4.6 percent.
In 2022, France’s gross domestic product (GDP) is set to grow by 4 percent, up from 3.8 percent estimated in March “as the productivity losses linked to the crisis are now seen as being much smaller than we originally estimated,” the bank added.
The French economy would return to pre-crisis levels of activity from the start of next year, a quarter earlier than previously predicted, as households would catch up on projects that were put off during the crisis, and investment would remain robust, the bank said.
Meanwhile, it noted that the economic outlook was “strongly contingent on the evolution of the health situation in France and the rest of the world,” warning that possible emergence of vaccine-resistant strains of COVID-19 could lead to the reintroduction of restrictions, which would curtail activity.
The French government expects the country’s economy to grow by 5 percent in 2021. In 2020, France’s economic growth shrank by 8 percent, its worst recession since World War II due to the coronavirus epidemic.