French economy predicted to keep growing, even if new restrictions imposed

Banque de France
Banque de France is optimistic for the future. Photo: Franck Fife/AFP
France's central bank said on Sunday that the EU's second-largest economy remained resilient even faced with the Omicron variant of Covid-19, predicting steady growth over the coming years even if new restrictions are imposed.

The coronavirus crisis “has not left scars in terms of production levels and potential production,” Bank of France director-general Olivier Garnier told reporters in Paris.

Central bank economists expect French output to add 3.6 percent next year, slightly down from previous predictions, and 2.2 percent in 2023, a slight increase.

Next year’s expansion would be fuelled by resurgent domestic demand, as houses spend down pandemic savings and companies invest.

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By 2024, France should return “close to the rhythm” its economy enjoyed before the pandemic, at around 1.4 percent annual growth, the Bank of France said – albeit with lower unemployment and higher wages.

If new restrictions were imposed to curb the spread of the Omicron variant, the central bank predicted slower growth for 2022 but a catch-up effect the following year.

As major central banks worldwide face the puzzle of whether to raise interest rates in a bid to control surging prices, the Bank of France said it expects inflation to remain elevated next year before falling back over 2023.

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