French central bank sees recovery taking longer

PARIS (AFP) – The French central bank said yesterday that it expects the country’s economy to recover more slowly than previously and return to its pre-pandemic level only in mid-2022.

The forecast is based on the COVID-19 pandemic not dying down immediately and widespread vaccination not being achieved before the end of 2021.

The Banque de France now sees economic output falling by nine per cent this year, with a rebound of five per cent in 2021.

Three months ago the bank forecast a drop in gross domestic product (GDP) this year of 8.7 per cent followed by 7.4 per cent growth next year.

Since then France has been swept by a second wave of the novel coronavirus that prompted authorities to reintroduce restrictions on movement and the closure of certain businesses.

That provoked an 11 per cent drop in activity in November from the same month last year, with activity expected to be eight per cent lower in December given the partial relaxation of confinement measures adopted by the government for the holiday period.

The central bank sees France’s economy continuing to grow at a five per cent rate in 2022 and then slow to a rate above two per cent in 2023.

Despite the foreseen recovery in the economy the Banque de France expects unemployment to jump higher as firms which have so far held on finally collapse.

It expects unemployment to jump to 11 per cent during the first quarter of 2021, and fall to nine per cent by the end of 2022.

France’s unemployment rate was around eight per cent, using international survey methods, before the pandemic hit Europe at the end of the first quarter.