Towards growth above 6% in France in 2021

If the summer was rotten in terms of temperatures, it was rather lenient for economic activity. Despite some clouds on the economy – a “fourth wave” due to the Delta variant, the establishment of the health pass or the absence of foreign tourists – the French economy is more in the form of the summer season.

The recovery started since the start of the year continued in July and August, bringing activity back to a level very close to the pre-crisis level, between – 1% and – 0.5% compared to the fourth quarter 2019, according to the economic report published by INSEE, Tuesday, September 7.

Growth will remain strong in the third (+ 2.7% compared to the three previous months) and fourth quarter (+ 0.5%) so that the forecast of a GDP increase of 6%, set by Bercy, for 2021 could ultimately be outdated.

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“The annual average growth would amount to 6.25% in 2021, after a drop of 8% in 2020”, forecasts INSEE. “Overall, activity should return to its pre-crisis level at the end of the year”, believes Julien Pouget, head of the economic department at INSEE. The optimism of INSEE is corroborated by data published on Tuesday by the Eurostat institute: thanks to the lifting of health restrictions and the progress of vaccination, the increase in activity in the second quarter reached 2.2 % instead of 2%, indicates the European agency.

Consumption is driving the recovery

One of the major uncertainties for the summer concerned the implementation of the sanitary pass. In the end, it will have had a limited impact on household consumption – which therefore continues to largely drive the recovery. In June, the French took advantage of the reopening of shops and the summer sales to make purchases. In July and August, the shopping fever subsided a little, of course, but spending was on leisure, cafes, hotels or transport, all sectors previously subject to strong administrative restrictions. Fuel costs, in particular, picked up sharply during the summer, fueled by departures on vacation. At the end of August, household consumption was down 1.5% from its pre-crisis level.

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The effect of the health pass was mainly felt on restaurants, which would have suffered a drop of around 10% in spending, according to bank card transaction data analyzed by INSEE. This effect, however, is assumed ” temporary “, due to the amplification of the vaccination.

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