France cuts its 2021 economic growth estimate to 5 percent

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Paris: French Economy Minister Bruno Le Maire announced that the new restrictions imposed to limit the spread of the Covid-19 epidemic prompted the French government to reduce its economic growth estimate to five percent, or one percentage point.

Le Maire told the weekly “Le Journal du Dimanche” that “closing schools and 150,000 shops is a must to curb the spread of the Coronavirus, but these measures will have an impact on the French economy.”

“For this reason, we will reduce our growth from 6 percent to 5 percent in 2021,” the French minister added.

France’s GDP recorded a contraction of 8.2 percent in 2020.

The governor of the French Central Bank, Francois Villerua de Gallo, said Thursday that the restrictions announced this week “are not supposed to lead to a significant reduction in his estimates,” which talk about a growth rate of 5.5 percent in 2021 if it does not continue beyond “early May / May”.

Bruno Le Maire stated that the total cost of the aid was estimated at 11 billion euros in April, stressing that “the presidential promise + whatever its cost + will be fulfilled.” He added that this support policy will continue “as long as the health crisis continues.”

The minister indicated that the end of public aid would be gradual and “in some sectors that will be permanently affected, such as aviation, they will be maintained.”

“But I want to reassure the French,” said Bruno Le Maire. “We have no difficulty in increasing debt in the markets at very low interest rates and the European Central Bank has confirmed that it will maintain its monetary policy to support the economy.”

He reiterated that the debt would be repaid after the crisis, noting that it was possible thanks to “strong growth, better control of public operating expenditures, and the continuation of structural reforms – starting with pensions.”

Before starting a possible new recovery plan, Le Maire wants to “quickly continue releasing a hundred billion euros” from the program announced in September and intends to spend half of it by the end of 2021.

The French economy minister took the opportunity to criticize once again the slowness of certain countries in approving the European Recovery Fund of 750 billion euros.

“France was scheduled to receive five billion euros in July, but it is unfortunately unlikely that we will receive this amount at that time,” he said.

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