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Towards 6.7% growth in 2021, renewed uncertainty linked to Omicron

Growth in France will be 6.7% this year, the highest in more than half a century after the historic 8% recession in 2020 due to the coronavirus. This was announced on Wednesday by the governor of the Banque de France, while reporting renewed uncertainty linked to the appearance of the Omicron variant.

After having caught up to its pre-crisis level in August, the gross domestic product (GDP) is expected to be 0.75 percentage point above this level in December, according to the economic report published Tuesday evening by the bank. French central.

The monetary institute had not officially raised its growth forecast of 6.3% since September, published when the very good results of the French economy for the third quarter were not yet known.

But its managing director Olivier Garnier had already mentioned in November a figure of around 6.75%, while specifying that it was only a “calculation in relation to the achievements” of the previous quarters. The government has not for its part revised its forecast of 6.25%, while the IMF expects 6.75% and the OECD on 6.8%.

The level of 6.7% “is much higher than what we expected in the first half of the year and it is the highest growth figure for more than 50 years”, declared François Villeroy de Galhau on RTL, adding that the Banque de France would deliver its full forecast for 2021 and the years to come on December 20.

In its economic report, the French central bank also slightly lowered its growth forecast for the fourth quarter by estimating now that it would be “slightly lower” than 0.75%, without however reaching this level as it previously thought. .

Activity did not increase in November, remaining at 100.5% of the level at the start of 2020, before the crisis, a stagnation that Mr. Garnier attributes to a slight decline in trade, transport and accommodation and food services, while all market services and industry continued to grow.

“A few months that are going to be more difficult”

In December, the level of activity should nevertheless resume its progression to be 0.75 percentage point above the pre-crisis, according to the note. The 8,500 business leaders surveyed by the central bank believe that in December, activity will continue to grow in industry and services, but stagnate in construction.

However, with the worsening of the fifth wave and the emergence of the Omicron variant, “there are a little more health uncertainties that could affect the economy during the month of December”, especially at the level of consumption, Mr. Garnier explained.

“French growth remains solid”, nevertheless assured François Villeroy de Galhau, explaining that business leaders had been cautious during the survey carried out last week “when we did not know anything about Omicron”.

“The bases for growth are very good” even if “the current period is more uncertain than what we had in the third quarter”, also explained to AFP Charlotte de Montpellier, economist of the bank ING.

She believes that due to the resurgence of the epidemic, “we have a few months that will be more difficult” before spring, pointing that the latest credit card data on consumer spending and Google Mobility on transport are report “a decrease in the pace of economic activity compared to October”.

The Governor of the Banque de France recalls for his part the “two points of attention which are the counterpart” of the economic recovery, namely the supply problems “which should dissipate” and the recruitment difficulties, less severe today. ‘hui but more durable, according to him.

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