Economic growth in France on course to reach 52-year high

15 Dec 2021

The economic recovery in France is stronger than forecast in 2021, on track to hit a 52-year high, bolstering the jobs market heading into an election year.

This is according to the forecast by the official statistics office, INSEE, which estimates France’s economy would grow 6.7% this year, the highest since 1969, and surpassing the 6.25% previously forecast.

The second largest economy in the eurozone has enjoyed a robust rally on the easing of Covid restrictions and as the vaccine campaign gained pace from the middle of the year onwards.

Moreover, on a quarterly basis, INSEE forecasts the country’s economy to grow around 0.5% each quarter through to mid-2022, following especially strong Q3 growth that surpassed expectations at 3%.

A total of 153,000 net new jobs were created in the second half of 2021, according to a Reuters report, with another 80,000 to be added in the coming six months as many businesses strive to find sufficient staff numbers to cater to customer demand.

The official statistics office predicted this would help drive France’s unemployment rate from 7.8% in Q4 to 7.6% by the middle of next year. This comes at a time when President Emmanuel Macron heads into a presidential election in April during which he’s expected to run for a second term.

The decline would bring unemployment in France to its lowest point since 2008 – not taking into account the glitch during the first Covid lockdown in 2020 when people were unable to seek employment – therefore artificially driving unemployment down.

Furthermore, INSEE forecasts inflation, having soared globally in 2021 on rising energy prices, to marginally edge down from close to the current 3% figure to 2.7% by the middle of 2022.