Page 20 - economic report 2021

domestic demand that saw the most important rise (11.5%), although it also suffered the greatest
decline in 2020 (-8.2%). On the other hand, foreign demand made a positive contribution to the
rise in GDP of 0.1 points (a clearly positive dynamic in comparison with the negative contribution
of 1.2 points in 2020). This trend can be explained by the slightly stronger recovery in exports
(8.8%) than in imports (8.0%). In Europe, the recovery in exports was generalised and the result
of both normalising trade flows and a partial recovery in foreign tourism (exports of services). The
good behaviour of the services balance and also the trade balance helped to lower the deficit in
the current account balance, from 1.9% of GDP in 2020 to 0.6% in 2021, according to the OECD.

As for supply, in 2021 all the major economic sectors saw a positive trend in Gross Value Added
(GVA) except agriculture (-0.6%), although the greatest increases were seen in the activities that had
suffered most from pandemic restrictions, i.e. construction (13.7% in 2021 compared with -14%
in 2020) and cultural and recreational activities
(12.3% in 2021 compared with -26% in 2020). Some economic sectors, such as
Other sectors, such as commerce, transport construct on, leisure, commerce,
and hotels and catering only recovered part
of the activity lost in the previous year (8.8% transport and hotels and catering have
compared with -13.2%) and the same happened grown but not regained pre-crisis levels.
with industry (4.5% compared with -10.7%).
The other sectors saw increases in 2021 that
were higher than the decreases suffered in the UNEMPLOYMENT RATE IN FRANCE
previous year (ICT, financial sector, real estate As % of active population Chart 2.2
and public administration), so in most cases they
were able to regain pre-pandemic activity levels.

18
The labour market remains in good form
af er a minor impact from the pandemic,
thanks to the adopted measures .

The relative resilience of the labour market, thanks
to the aid approved by the French Government
The external environment of the Andorran economy | II. The French economy
to support businesses and workers’ income,
f: European Commission forecasts (May 2022).
helped to contain the rise in unemployment and
Source: Eurostat.
preserve household purchasing power during the
worst year of the pandemic, so it was possible
to rapidly revive the rising trend in the labour market in 2021. These circumstances explain why the
unemployment rate fell in 2020 (from 8.4% in 2019 to 8% in 2020) despite the steep fall in GDP.

In 2021, the unemployment rate continued to fall, but more slowly (7.9%), and employment also
saw quite positive behaviour, with a 1.8% increase in jobs, after falling only 0.9% in the previous
year. The fact that adjustment to the activity shock was made through hours worked rather
than the number of staff, unlike in previous crises, explains this labour market resilience.

Despite the rise in prices in the second half of the year, workers’ purchasing power increased.
Wages per worker saw an increase of 3.2% in real terms, much higher than the European average
of 1.7%. This increase is lower than for labour productivity in businesses (5.1%), leading to a gain
in competitiveness for French businesses (in terms of real unit labour costs).

In France, as in the member states as a whole, there was a rising trend in inflation as 2021
progressed. Although inflation was very low in the first two months of the year (0.08%),
influenced by a context of plummeting global aggregate demand and a dramatic fall in oil prices, it