France’s economy is recovering more quickly than expected this year because the COVID-19 crisis wanes, the financial institution said on Monday, raising its growth outlook for this year. The euro zone’s second-biggest economy is on track to grow 6.3% this year, the Bank of France said in its quarterly outlook, revising its estimate up from 5.8% expected previously in June. The economy has outperformed most expectations in recent months after the country’s vaccination campaign picked up speed within the second quarter and coronavirus restrictions were eased, allowing most businesses to return to figure.
The central bank’s revision makes its outlook a tad more optimistic than the govt, which is building its 2022 budget on the idea the economy will grow 6% this year. The faster than expected bounce-back meant that as a result growth would be a touch lower next year because more of the recovery would be concentrated in 2021. The financial institution forecast the economy would grow 3.7% in 2022 and 1.9% in 2023, down from previous forecasts for 4.1% and 2.1% respectively.
Drawing on the findings of its monthly survey of 8,500 businesses, the financial institution estimated the economy was operating at only half a decimal point from pre-crisis levels in September and would be back to normal levels by the top of the year for the primary time since the pandemic broke out. On a quarterly basis, it estimated the economy would grow on the brink of 2.5% within the three months through the top of September, the financial institution estimated. that might be quite double the 1.1% growth seen within the second quarter.
With the economy booming, half of companies were reporting staffing difficulties while quite half industrial companies and 61% of construction firms were having supply-chain troubles. Against that backdrop, inflation was expected to average 1.8% this year before easing back to 1.4% next year and 1.3% in 2023. Despite the strong rebound, unemployment was seen largely stable at 8.1%-8.2% between now and 2023.