French central bank trims economic outlook

Prior to the second wave, the bank had forecast in September a contraction of 8.7% this year and growth of 7.4% in 2021 and 3% in 2022. The French economy would not return to pre-crisis levels of output until mid-2022, it said, whereas that had previously been expected early next year.

The French economy will rebound next year as coronavirus restrictions are lifted although not as fast as previously expected, the central bank forecast on Monday. After contracting about 9% this year, the euro zone's second biggest economy will post growth around 5% in 2021 and 2022 before easing to slightly more than 2% in 2023, the Bank of France forecast in its quarterly outlook.

The rebound has been knocked back after a second lockdown had to be imposed at the end October following a new outbreak of infections which is gradually coming under control. Prior to the second wave, the bank had forecast in September a contraction of 8.7% this year and growth of 7.4% in 2021 and 3% in 2022.

The French economy would not return to pre-crisis levels of output until mid-2022, it said, whereas that had previously been expected early next year. Despite the anticipated rebound, the unemployment rate is expected to keep rising to 11% in the first half of 2021 before falling to 9% by the end of 2023.

Drawing on the findings of its monthly business climate poll, the central bank said the economy was operating down 8% of normal levels in December, which meant output would contract 4% in the fourth quarter from the previous quarter.

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