France Reports Fastest growth, German economy shrinks

France has posted its strongest growth in over 50 years, as the economy recovered from the economic shock of the pandemic. The French GDP expanded by 7% last year, data just released shows; the strongest annual expansion since 1969, as the economy showed resilience in the face of supply chain disruption.
It follows an 8% contraction in 2020 as lockdowns and restrictions to fight Covid-19 drove the economy into deep recession. French annual growth up to 2020 Photograph: World Bank

The strongest boom in a generation is a boost to Emmanuel Macron’s economic credentials, ahead of April’s presidential election in which he is widely expected to run for a second term.

France’s economy grew by 0.7% in the last quarter, faster than expected, but slower than the 3.1% growth in July-September as the latest wave of infections hit Europe last autumn.

Consumers helped the recovery, with household spending rising by 0.4% in the quarter following the relaxation of restrictions earlier in 2021. Business investment, or gross fixed capital formation (GFCF), expanded by 0.5%, mainly lifted by spending on IT services
Statistics body INSEE says France’s economy has now expanded ‘significantly’ past its pre-crisis levels, having returned to its pre-pandemic level of gross domestic product in Q3.

After returning to its pre-crisis level in the previous quarter (+0.2% compared to Q4 2019), GDP exceeded it significantly in Q4 (+0.9% compared to Q4 2019).

The Eurozone’s two largest economies had a very different end to 2021, as the region’s recovery from the pandemic continued. France beat forecasts with 0.7% growth in the last quarter, helping it rack up its best annual growth since 1969.

But Germany stumbled, with a 0.7% contraction in Q4 which puts it on the brink of recession, as the latest wave of Covid-19 and supply chain problems disrupted activity.
That took the shine off otherwise-decent economic numbers from the Eurozone, with Sweden and Spain also expanding solidly.