NLBC: Figure of the Month | Nov.2021

The Netherlands Business Council would like to introduce you these numbers published by our partner ING.

French GDP grew more than expected in the third quarter, by 3% compared to the second quarter. This excellent result makes France the first major European country to return to its pre-crisis level of activity. The strong recovery of the economy was driven by household consumption, which increased by 5% over the quarter, thanks to the significant increase in spending on services, particularly in the hotel and restaurant and accommodation sectors. Manufacturing, on the other hand, stagnated, weighed down by supply chain difficulties and rising costs. At the end of the third quarter, the carryover for France, i.e. the evolution of GDP over the year if growth in Q4 were to be zero, stood at 6.6%.

The Q3 growth rate is more than likely the highest we will see in France in 2021 and 2022. The peak has passed and now economic growth will start to slow down, notably due to higher energy prices and higher headline inflation. Headline inflation stood at 2.6% in October, its highest level since 2008, and is expected to remain high in the coming months. This higher inflation leads to a sharp increase in costs for companies, directly impacts the purchasing power of households, despite the support measures put in place by the government, and weighs on confidence. As a result, we believe that, from the fourth quarter onwards, the pace of growth will moderate. After a forecasted increase in activity of nearly 6.8% for the year as a whole, growth should be close to 4% in 2022.   

Charlotte de Montpellier, Economist ING