‘The recession is behind us’ – French economy predicted to rebound after Covid slump

'The recession is behind us' - French economy predicted to rebound after Covid slump
A ray of light shines over the Paris landmark Arc de Triomphe. Photo: Martin BUREAU / AFP
The French economy will rebound strongly this year from a deep recession sparked by Covid-19, the country's central bank chief said on Tuesday.

Growth will reach at least five percent in 2021, Bank of France governor Francois Villeroy de Galhau told France Info radio, a forecast that “comforted” a prediction the bank made in December.

 “The recession is behind us,” he said.

French growth “will be among the strongest in Europe, clearly above the European average”, the governor said.

He said the current growth phase was likely to last for about one year, allowing the French economy to return to its pre-crisis levels by the spring or the summer of 2022.

It is now running around five percent below that level, he said.

The extent of the recovery will ultimately depend on a bounce back in consumer confidence once Covid restrictions holding back the economy are lifted, Villeroy de Galhau said.

But he said employment and public investment had done “better than we feared” since the crisis, justifying some optimism.

The French government is currently aiming for six percent growth this year.

French GDP slumped 8.3 percent in 2020, national statistics bureau Insee estimated in late January, saying that downturn had turned out to be less brutal than originally forecast.

A massive drop in consumer spending was behind much of the 2020 decline, while investment and foreign trade held up well, it said.

Separately, the Bank of France said Tuesday that first-quarter growth was likely to show “a slight increase” from the fourth quarter of 2020.

Some sectors, including the chemical and construction industries, were operating at normal levels but others – notably the aeronautics industry – had yet to recover from their Covid slump.

Cash flow levels were much more favourable in industry thanks to government loans than in services, the bank added.

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