Banque de France First Deputy Governor: At Acceleration Point on Road to Recovery
29 June 2021
By David Barwick – FRANKFURT (Econostream) – The French economy is at an inflection point from which its recovery should accelerate, Banque de France First Deputy Governor Denis Beau said Tuesday.
In remarks before an association of financial institutions, Beau described the situation as ‘an inflection point, an acceleration point that we can hope will be decisive on the road to recovery, more than 15 months after the outbreak of the pandemic, and the unprecedented peacetime economic shock that it generated.’
The phase of the French economic rebound that began this quarter should see activity return to pre-pandemic levels in the first quarter of next year, he said. GDP growth would hit 5.75% this year, 4% next year and 2% in 2023, he said, reiterating the latest Banque de France forecasts.
The economic expansion would be driven by domestic demand this year and next, he said.
As business support is gradually phased out, insolvencies would at least regain pre-crisis levels of around 50,000 a year, but the crisis would not seriously exacerbate this, he said, unless balance sheet imbalances related to the crisis persist.
Not including those firms that had previously already been teetering on the brink, persistently problematic balance sheets could affect 6% to 7% of French companies, and these will need careful monitoring, he said.
Beau characterised the French banking sector as resilient and ‘part of the solution’ to the crisis.
‘In the context of a rebound and acceleration of economic growth, which is our central scenario now, the role of the banking sector is of course crucial’, he said.