Consumption, investments, contained unemployment ... all the lights of the economy are green

2021, the crazy year! In reference to this period of the interwar period which saw Western economies embrace one of the strongest growths in their history, the coming months should experience the same euphoria. If in the first quarter, the gross domestic product (GDP), down 0.1% while INSEE forecast growth of 0.4%, came to temper this enthusiasm, optimism remains. As proof, the government is maintaining its growth objective at 5% for 2021. The same goes for the economists of the Banque de France (+ 5.5%), those of the OECD (+ 5.9%) and those of the European Commission (+ 5.7%).

“All the indicators are green, even that of household consumption, analyzes Anne-Sophie Alsif, chief economist at the Bureau of Economic Information and Forecasts (Bipe).

Our concern that they do not consume is swept away.

They are making up for it.

During the summer of 2020, consumption had increased by 20%.

I think we will do as much, if not more this summer.

"

Clothing spending up 50%

Since the first restrictions were lifted on May 19, the buying fever has infected the French.

According to Bercy, between May 19 and 23, spending by bank cards was 20% higher than in the same period of 2019. The following week, the increase was 15%.

Finally, in the last week of May, spending in restaurants and hotels returned to around 85% of their 2019 level, while those in clothing increased by 50%.

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A consumption that promises to be all the stronger since, according to the Banque de France, the French woolen stockings have gained additional 142 billion euros since the start of the pandemic.

Money to spend, especially if it is placed in an A booklet. Its rate of pay of 0.5% - already below the inflation rate for three years - will be even less attractive in the coming months.

Inflation, currently at 1.4%, is expected to increase further under the effect of soaring energy and commodity prices.

"But it should not exceed 2% in France," predicts Anne-Sophie Alsif who has just published for the Bipe her annual economic forecasts by sector.

A return to the 2O19 level within six months

Thus, the manufacture of electrical, electronic and computer equipment should register the strongest growth, with + 21.2% this year, followed by + 12.6% for the manufacture of transport equipment, + 12.1% for energy and water or even + 8.1% for construction.

Only two sectors, accommodation and food services (- 21.9%) and small service activities (- 2.6%), such as the shoe trade, are expected to decline.

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“The 20 additional debt points had a positive effect,” concludes the economist.

The investment has been maintained and there has been no destruction of human capital.

The rise in unemployment will be contained at 1%.

And, in early 2022, most sectors should return to their 2019 figures, provided vaccination continues and the epidemic does not start again.

"

Reducing the debt raises the question of tax increases

Investments are boosted by the attractiveness of France to foreign investors, but especially by the recovery plan of 100 billion euros.

More than 30 billion euros have already been spent and the government hopes to disburse another 40 billion euros by the end of the year.

As in the Roaring Twenties, the debt problem remains. It should reach 117.2% of GDP in 2021 after 115% in 2020. A debt that the government hopes to reduce through growth. According to Bipe forecasts, it should stand at 4.4% in 2022. “Then we should return to our usual growth, between 1% and 2%, projects Anne-Sophie Alsif. As long as interest rates are low, this debt will be sustainable. But we will have to send signals to the markets. We can expect tax increases from 2023. "