French economy will recover from Covid crisis by mid-2022, central bank says

The French economy will shrink about 10 percent this year due to the coronavirus pandemic and will only recover to pre-crisis levels by mid-2022, the Bank of France said Tuesday. 

File photo of Banque de France building in Paris
File photo of Banque de France building in Paris © AFP - Stéphane de Sakutin

It said signs of a "progressive" recovery should be seen from the third quarter this year after a slump in output of 15 percent in the three months to June.

The economy should then expand seven percent in 2021, gaining another four percent in 2022, it said.

Unemployment is likely to hit highs of above 11.5 percent in mid-2021, it added.

The central bank said the outlook could be brighter if the Covid-19 outbreak is quickly brought under control, while a second wave of infections could plunge the economy into a 16 percent downturn this year followed by growth of only six percent in 2021 and four percent in 2022.

The forecasts did not take into account the potential impact of a recovery plan that the government aims to announce in the coming months.

President Emmanuel Macron put France under one of the most stringent lockdowns in Europe in mid-March, effectively shutting down large swathes of the economy until restrictions began to be lifted on May 11.

As of the end of May, economic activity was still running 17 percent below normal levels, though up from the 32 percent reduction seen during the first two weeks of lockdown in March, the central bank estimated. Business surveys suggested activity could get back to less than 12 percent of normal levels this month, it added.

Nonetheless, the time spent under lockdown meant that the economy probably contracted 15 percent in the second quarter from the previous three months, the bank estimated.

(FRANCE 24 with AFP and REUTERS)



Daily newsletterReceive essential international news every morning

Take international news everywhere with you! Download the France 24 app