French Economy Grows with Surge in Business Activity as Country Reopens

The French economy grew twice as fast as expected in the second quarter, the central bank said on Wednesday, as business activity surged after Covid-19 restrictions were lifted.

The Banque de France said that the eurozone’s second-biggest economy expanded by around 1.0 percent from the first three months of the year, while noting that supply bottlenecks and staff shortages had still combined to hobble the recovery.

The bank maintained a 2021 growth forecast of 5.75 percent, expecting activity to withstand the effects of a feared fourth wave of coronavirus infections.

The European Commission has estimated that the French economy will expand by 6.0 percent this year, the same figure floated last week by the national statistics agency Insee.

French authorities have remained a bit more cautious meanwhile, and are sticking for now to a full-year growth forecast of 5.0 percent.

“June was better than companies expected,” central bank general director Olivier Garnier was quoted as saying as he presented its latest monthly survey of company bosses.

Most industrial sectors showed improvement and there were strong advances in commercial sectors, especially among hotels and restaurants, the survey showed.

Several industrial sectors, notably aeronautics and automobiles, were still only at around three-quarters of the level seen before the pandemic however.

Tensions in supply chains and increases in the cost of raw materials were cited as factors holding activity back, especially in the automobile and construction sectors.

Hiring was a problem as well, with 44 percent of business leaders who responded to the bank survey highlighting problems finding qualified staff, in particular for construction and temporary work.