It was a smiling Bruno Le Maire who appeared on the “4 Vérités” set on the morning of Friday January 28. In 2021, French growth reached a record figure of 7%, indicated the National Institute of Statistics (Insee). The Minister of the Economy underlined this “spectacular rebound” of the hexagonal Gross Domestic Product (GDP) not hesitating to affirm that “the government’s economic policy is effective”. But can we be as enthusiastic as the tenant of Bercy in the face of this increase in our national wealth and say that the economic crisis linked to the Covid-19 epidemic is behind us? Franceinfo helps you see things more clearly.
Unprecedented growth for 52 years
The last time the French had experienced such growth was in 1969 (7.1%), just after the crisis caused by the May 1968 movement. Emmanuel Macron was not yet born. French GDP growth in 2021 therefore reached a record (7%) which had not been seen for more than half a century. A figure observed after experiencing a dizzying drop in 2020 due to the health crisis with nearly -8%, and a start to 2021 marked by the third wave of the epidemic and still significant restrictions. French growth accelerated sharply in the summer, with a slowdown, however, to 0.7% in the last quarter at the time of the fourth wave of Covid.
“We had dived a lot in 2020underlines on franceinfo Mathieu Plane, economist at the French Observatory of Economic Conditions (OFCE). This plunge, fortunately, was not sustainable. The ascent to the surface was even faster than expected, which meant that we had a fairly clear recovery. Just getting back to pre-crisis levels of activity is generating a lot of growth.” This figure of 7% growth is also better than expected. The National Institute of Statistics (Insee), in its latest forecast dating from mid-December, forecast growth of 6.7% in 2021, a figure similar to the forecast of the Banque de France. “It’s clearly a very dynamic rebound, we could hardly have hoped for it at the start of 2021”advances Charlotte de Montpellier, economist at ING to AFP.
2021 GDP still lower than 2019
Does this good growth figure for 2021 erase the economic crisis, as the Minister of the Economy asserts? INSEE qualifies this optimism. If the GDP in the fourth quarter (Q4) of the year 2021 is above the Q4 of 2019 (+0.9%), over the whole year this is not yet the case. In 2021, GDP will thus remain “1.6% below its average level in 2019”specifies the INSEE.
bruno. The Mayor has also recognized in the “4 Truths” that certain sectors “continue to have difficulties”, in particular those of tourism, events and hotels and restaurants. The crisis is therefore not behind us. “Just getting back to pre-crisis levels of activity is generating a lot of growth. That does not mean that we have a growth of the Glorious Thirties, it has nothing to do. We are not creating more added value in 2021 than in 2019, but it is the catch-up effect”emphasizes Mathieu Plane.
Record growth but massive debt
If the “whatever the cost” and the recovery plans have made it possible to boost the GDP, they also increase our public debt. To deal with the health crisis, the State spent in 2021 a little more than 60 billion euros in total. A support for growth which has the direct consequence of increasing the public deficit, which should still be around 7%, and of increasing the public debt which is around 113%. For Mathieu Plane of the OFCE, “there will therefore still be the management of this post-crisis debt which will be complicated, including private debt by loans guaranteed by the State.”
Even stronger than expected growth in 2021!
This is good news for our economy, employment and public accounts.
This will further reduce the deficit.
This demonstrates the effectiveness of the policy of@EmmanuelMacron and @governmentFR facing the crisis.#we continue https://t.co/sIs1BYofSp— Olivier Dussopt (@olivierdussopt) January 28, 2022
This growth “is good news for our economy, employment and public accounts”, reacted on twitter the Minister of Public Accounts Olivier Dussopt. He hopes that “this will further reduce the deficit”.
One of the strongest European growth
This growth should, however, allow France to sign one of the best performances in the euro zone, something rare. If, however, this increase must be measured by the magnitude of the shock suffered the previous year, France is doing better than its European neighbours. Growth is 5% in Spain, whereas the country had experienced -10.8% in 2020. In Germany, growth peaked at 2.8% in 2021 but the decline in GDP was less marked in 2020 (-4. 9%).
“France is doing pretty well compared to the big countries, but not necessarily compared to the small countries of Northern Europe, which are doing better. In fact, economic and health management benefits us rather a little better than what can be seen elsewhere.
Mathieu Plane, economist at the OFCEat franceinfo
Many French economic indicators are indeed green. Result in particular of massive public aid such as partial unemployment and the solidarity fund put in place to deal with the epidemic. The employment rate has reached a level not seen since 1975, unemployment is at a record low and business investment has exceeded its pre-crisis level. “Obviously, we must be happy with the result of 2021 but the hardest part remains to be doneexplains Philippe Crevel, economist and director of the Circle of savings on franceinfo. I would say that if 2022 is a year of transition, the turning point will be around 2023-2024. And there, we can really see the state of the French economy.”
Omicron risk and inflation in 2022
For 2022, the government forecasts growth of 4%, a figure that is not so far from that of the Banque de France (3.6%). Insee, for its part, forecast in December on growth of 0.4% in the first quarter, then 0.5% in the second. This was before the Omicron wave hit the country, but the government wants to be optimistic. “I don’t fear the effects of Omicron” on growth, assured Bruno Le Maire on Wednesday.
The other major risk for the economy remains inflation driven by rising energy prices. It stood at 2.8% over one year in December. It could weigh on the purchasing power of households and curb their consumption. “Inflation is creating significant tensions that could penalize consumption in the coming monthsexplains Philippe Crevel. For categories of households with insufficient income, it will be necessary to make trade-offs such as spending less on fuel or food products. And that, obviously, is bad for consumption.” The executive has still deployed more than 15 billion euros to limit the effects of inflation. This subject stands out as the first concern of the French less than three months before the presidential election.