France ‒ 2021-2023 Scenario: recovery firms, despite uncertainty

France ‒ 2021-2023 Scenario: recovery firms, despite uncertainty
  • Summary
  • Recent trends in activity
  • Our scenario for 2021-2023
  • Focus: Alternative scenario, spending surplus savings

In resume

The Omicron variant of Covid-19 is rampaging through the population instilling new fears about the prospects of the economy recovering in the short term. Yet, in the absence of very restrictive measures (from an economic viewpoint), the negative impact of this latest wave should be limited. Following the 3% qoq rise in the third quarter of 2021 as pandemic-related restrictions were lifted and services reopened creating a mechanical rebound in GDP, growth should nonetheless slow down. It could reach 0.5% in Q4 2021 and in Q1 2022.

France ‒ 2021-2023 Scenario: recovery firms, despite uncertainty

French GDP (practically) returned to pre-pandemic levels in the third quarter of 2021. But the GDP data obscure some significant differences: investment has been robust over several quarters and was higher in Q1 2021 than Q4 2019; consumer spending on the other hand didn’t take off until the third quarter when restrictions were lifted. What now? Returning to where activity was before the pandemic is not an end in itself. France’s GDP has some way to go before resuming the path it was on before Covid-19 and its many variants hit.

Pierre BENADJAOUD, Economiste