How will the French economy recover from the Covid-19 pandemic? Up to now, all the economic institutes have used their estimates, but the government has not provided any detailed forecast. In the stability program, a document sent as every year in April to the European Commission, in full containment, only data for 2020 appeared.
The preparatory document for the orientation debate on public finances, which takes place every year in mid-July in Parliament, gives initial indications. Bercy envisions a rebound in gross domestic product (GDP) of 8% in 2021, “Excluding the effect of the upcoming stimulus plan”, can we read in this report posted online Friday, July 3. The third amending finance bill (PLF), whose consideration in the National Assembly was suspended Friday due to the resignation of the government, provides for this year a historic decline of 11% of GDP.
“The gradual recovery started in mid-2020 would continue in 2021, supported by government measures”, is it indicated even if “GDP in 2021 would remain around 4% below its level in 2019”. A little more optimistic forecasts than those of the IMF (+ 7.3%) or the Banque de France (+ 7%).
In the scenario of the Ministry of the Economy, the recovery “Would be driven by the dynamism of domestic demand”, and in particular by “The vigorous recovery in consumption observed from May 11”, date of start of deconfinement, and by “The resistance of purchasing power” in “Largely preserved” through government employment support schemes.
A forecast that may still vary
In contrast, the investment “Would remain more significantly behind its previous level”, uncertainty over the financial and economic outlook “Continuing to weigh”, estimates Bercy, which anticipates an increase in investment growth of 20%, the latter remaining “Clearly [inférieurs] at [leur] high level of 2019 ».
The public deficit is expected to partly decrease, to – 5.5% of GDP next year, against – 11.4% expected this year. And this, says the report, because of the rebound in economic activity, but also the “Exceptional and temporary nature of the support measures”, that is to say, the 57.5 billion in public spending incurred in 2020 (partial unemployment, aid to businesses, etc.). Still for 2021, Bercy expects a public expenditure rate of 57.3% of GDP, and a debt reduced from 120.9% to 117.5%. All this is understood “Unchanged policy”, that is to say outside a fourth amending finance bill and stimulus plan… and is therefore likely to vary further.
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