France to reach pre-crisis production in early 2022, central bank says – –

France to reach pre-crisis production in early 2022, central bank says – –

(Bloomberg) – The French economy will return to pre-pandemic production in early 2022, with the lifting of restrictions and acceleration of vaccinations fueling a stronger-than-expected rebound in the second half of this year, Bank of France .
The central bank has raised its growth forecast for 2021 to 5.8% from 5.4% in March, because it considers that the spending and the significant investments help the French economy to exceed the average of the euro area. Productivity losses due to the crisis are also lower than previous estimates, and the institution has revised upwards its forecasts for 2022 and 2023. It now expects an expansion of 4.1% next year, at instead of the 3.8% forecast in March.

“On the way out of the crisis, the French economy is not quite there but it is accelerating significantly,” Governor François Villeroy de Galhau said on Monday at a press conference in Paris. “There are two key drivers: consumer spending and business investment, which correspond to a return of confidence key to the recovery. “

The accelerating economic recovery in the euro area has sparked debate among members of the European Central Bank on how and when to end its emergency support measures. Villeroy said any discussion of tapering is speculative and the recent acceleration in inflation that could lead the ECB to tighten policy is only temporary.

The Banque de France revised its inflation forecast for 2021 to 1.5% from 1.1% in March. But he expects the rate to drop to 1.2% in 2022 and 2023.

“The tensions around the offer are temporary, but this is something we will be monitoring carefully,” said Villeroy. “There are upside risks, but inflation should stay well below the 2% target. “

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