France has moved away from its European neighbors with 7% growth in 2021, the country’s fastest expansion in 52 years, as it rebounded above pre-pandemic output levels thanks to higher consumer spending.
The strength of France’s recovery from the coronavirus pandemic, which dragged the country into a record post-war recession in 2020, is good news for President Emmanuel Macron, who is set to seek a second term in the election. of April.
The rebound of the French economy continued in the last three months of last year, with gross domestic product growing by 0.7% compared to the previous quarter. That beat most economists’ expectations and outpaced its biggest neighbor Germany, where the economy contracted 0.7% over the same period, leading to annual growth of 2.8% .
“The French economy has rebounded spectacularly and that has erased the economic crisis,” Bruno Le Maire, finance minister, told France 2 Television. “There are still sectors that are struggling, such as tourism and hospitality, but most are recovering very strongly and that is creating jobs.”
Combined with stronger-than-expected growth in Spain, France’s resilient performance suggests the eurozone should grow at a healthier-than-expected pace in the fourth quarter.
Martin Wolburg, senior economist at Generali Investments, said “we are going through a calmer period but it looks like we will avoid recession in the euro zone”. He predicted the block would rise 0.3-0.4% in the fourth quarter, when those numbers come out on Monday.
The Spanish economy also performed better than expected in the fourth quarter, growing by 2% and boosted by a strong rebound in services exports which came mainly from tourism. However, Spain’s economy remained 4% below pre-pandemic gross domestic product levels, despite growing 5% last year – its fastest growth rate since 2000.
Spanish growth in 2021 was below government forecasts of 6.5%. Pablo Casado, leader of the opposition People’s Party, said the figures “confirm the worst recovery in Europe” and tweeted that the government should “stop lying to Spaniards and revise forecasts now”.
Germany’s contraction in the fourth quarter left its output 1.5% below pre-pandemic levels and underscored how Europe’s largest economy has been hit by its greater exposure to supply bottlenecks. strangulation of the supply chain and a weaker recovery in household spending. In contrast, the US economy was 3.1% above its pre-pandemic level in the fourth trimester.
“The German economy went into hibernation at the start of the year,” said Carsten Brzeski, head of macro research at ING. “Restrictions to combat the fourth wave of the pandemic and the Omicron wave as well as rising energy prices weighed on private consumption.”
France, on the other hand, has been boosted by a sharp rebound in consumer spending after the easing of coronavirus restrictions last year, while also benefiting from its lower exposure to global supply bottlenecks. hit the German manufacturers.
France’s national statistics office said average growth in 2021 was its fastest rate since 1969, at the height of the post-war period known as “les Trente Glorieuses”. The economy has rebounded strongly from its 8% contraction in 2020.
The euro zone’s second-largest economy returned to its pre-pandemic GDP level in the third quarter, he said. Germany is unlikely to reach this milestone before the second quarter and Spain should do so even later.
In the fourth quarter, the French economy was fueled by a 0.4% increase in household spending and a 0.5% increase in investment, while changes in inventories also added 0.4 percentage points. percentage growth. Trade, on the other hand, made a negative contribution of 0.2 percent.
However, economists expect the French economy to slow at the start of this year after daily coronavirus cases hit a new high of 500,000 this week and stricter rules forced people to be fully vaccinated. to enter many public places.
The number of Covid-19 patients in French hospitals has risen above 30,000 for the first time since November 2020, but a lower proportion of them are in intensive care than in previous waves of the pandemic.
The French government, which plans to ease coronavirus restrictions next month despite the high level of cases, had previously forecast the economy to grow by 4% in 2022.
Additional reporting by Daniel Dombey in Madrid