The Insee is optimistic at the beginning of July 2021: the economic report published at the start of July highlights a growth rebound that is exceeding expectations and, notably, more than anticipated by the government or even the Bank of France. Could this erase the crisis as early as 2021? It will all depend on the Delta variant, the spread of which is concerning…
An economy “roughly” identical to the pre-crisis one in 2021?
The government does not want any unpleasant surprises and remains cautious with its growth forecasts, only betting on “a minimum of 5%” in 2021. The Bank of France, on its part, has noticed an improvement and, in spring 2021, raised its estimates to 5.75%. But Insee is the most optimistic: it sees the light at the end of the tunnel with a growth rate of 6% for France in 2021.
The Statistical Institute goes even further: thanks to the confidence of households and businesses, who predict that health measures will not be reinstated in autumn 2021 or, at the very least, will not be as significant as in 2020 and early 2021, the economy is set to do very well. “Under this hypothesis, French economic activity could return to roughly its pre-crisis level by the end of 2021,” writes Insee.
The crisis erased? Not really…
Everything lies in the detail of this “roughly”… the crisis would not be erased. To begin with, the GDP, despite Insee’s optimistic forecast, would not be at the same level by the end of 2021 as it was at the end of 2019, if only because a growth of 6% does not cancel out a recession of 8% (the level of decline in growth in 2020).
Moreover, Insee specifies: by the end of 2021, the economy “would then be 2 to 2.5 GDP points below the level one might have expected if the pre-crisis trend trajectory could have continued over those two years.” A delay that would only be made up for, therefore, in 2022 at best.
The Delta variant: the concerning variable
But all these good news, even if France’s growth would ultimately exceed expectations, remain at risk of an epidemic surge in autumn 2021, the much-feared “fourth wave.”
The cause? The Delta variant: it is spreading rapidly and has already led to the reinstatement of health measures worldwide, including in Europe. Portugal has reinstated a curfew in Lisbon and 45 other cities, Ireland has limited access to its pubs, and even in France, the department of Landes has decided to postpone its reopening by one week.
