Page 19 - economic report 2021

II. The French economy

1. The main features of economic development in 2021

In 2021, the French economy recorded 6.8% growth, according to the INSEE (French National
Statistics Institute), after the historic fall of 7.8% in the previous year due to the pandemic. Both
the 2020 fall in activity and the recovery in 2021 were stronger in France than in the Eurozone as
a whole (-6.4% and +5.3%, respectively). The success of the mass vaccination campaign enabled
the health sector to overcome the successive waves of SARS-CoV-2, implementing only selective
restrictions in certain sectors. Moreover, the French economy has shown itself to be more and
more resilient to further outbreaks of the pandemic thanks to the strong recovery in household
consumption, to renewed investment due to improved business expectations and to the dynamism
of international trade, despite disruptions in the supply chains. But this clear rebound in activity
was not complete, nor was the improvement in the health situation to which it is largely linked. So,
on average, French GDP in 2021 stood at about 1.5% below the 2019 average.

Regarding the quarterly behaviour of French The French economy starts to
GDP, the year-on-year rate of growth continued recover in the second half of the year.
a hat-shaped trend. In the first quarter of 2021,
despite the impact of the third coronavirus
wave, year-on-year change was positive for the first time since the start of the pandemic (1.8%). The
more specific nature of the restrictions introduced and the ability of businesses and households to 17
adapt to the restrictive environment helped to mitigate the economic impact of the second wave in
comparison with the first. In the second quarter of 2021, year-on-year GDP moved towards 19.2%
due to a statistical effect, as economic activity had fallen 18.9% in the same quarter of the previous
year. Finally, the rapid vaccination process from the third quarter and the decreasing mortality of
the virus allowed for social distancing measures to be eased and strongly drove the recovery in
economic activity in the second half of the year. So, year-on-year GDP growth in the third and
fourth quarters of 2021 reached 3.0% and 4.9%, respectively.

Regarding the contribution to variations in French GDP in 2021 from different c≤omponents,
expansion in domestic demand was the main explanation, with a contribution of 7 percentage
points (p.p.), after a negative contribution of
6.4 p.p. in the previous year. Domestic demand
therefore completely recovered pre-pandemic GDP GROWTH IN FRANCE AND THE
levels. All components of domestic demand EUROZONE - Interannual variation rates, as % Chart 2.1
contributed to the increase in GDP in 2021.

There was a strong recovery

in consumpt on, especially public, The external environment of the Andorran economy | II. The French economy
and investment.

Private consumption – representing 52% of
GDP – grew 6.0%, and public consumption
– which is 23% of GDP – by 2.8%. With the
rebound in consumer spending, the savings France Eurozone
rate fell but is still at a historically high level f: European Commission forecasts (May 2022).
Source: Eurostat.
(18.7%). Investment is the component of