The OECD now estimates that the French economy should grow around 6.8% this year (against 6.3% previously), thanks to a stronger-than-expected recovery since the summer, can we read in a study on the French economy published Thursday, November 18.
The body bringing together the richest countries then expects growth of 4.2% in 2022 for France, against 4% expected when its latest forecasts were published in mid-September.
“After a weak start in 2021, the economy rebounded under the effect of reduced epidemic circulation, the acceleration of the vaccination campaign and the relaxation of health restrictions”, writes the Organization for Economic Co-operation and Development in this study.
According to a first estimate from INSEE published at the end of October, gross domestic product (GDP) jumped 3% in the third quarter, well above expectations. If the institute, like the government, has kept at this stage its forecast of 6.25% for 2021, the Banque de France now evokes a growth of 6.75%.
High debt risk
The OECD underlines in particular that “Fiscal measures strongly support domestic demand”, in particular emergency aid for households and businesses, as well as the reduction in housing tax, which “Will considerably lessen the effects of the crisis on household income and purchasing power, despite the expected drop in unemployment benefits”. At the same time, the OECD notes that the recovery plan and the France 2030 investment plan “Preserved the production capacity of companies” and “Will also support their investment”.
But the organization points out the risks linked to the evolution of the health situation and to a very high indebtedness, both private (companies and households) as public. It will be necessary “Significant efforts” for “Stabilize” public debt “To nearly 120% of GDP in 2060”, against around 115% expected this year, warns the OECD, which recommends “An ambitious program of significant and gradual reduction in public spending”, in particular by raising the retirement age.
The institution also recommends that France “Reduce the public sector wage bill” and to eliminate certain tax loopholes, in particular anti-environmental ones.