France:2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for France

France: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for France
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Volume/Issue: Volume 2023 Issue 056
Publication date: January 2023
ISBN: 9798400232336
$20.00
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Topics covered in this book

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Finance , Inflation , Economics- Macroeconomics , Money and Monetary Policy , Public Finance , International - Economics , HICP inflation , better-than-expected state revenue performance , service price , pension reform plan , government's proposal , Energy prices , Inflation , Price controls , Financial Sector Assessment Program , Global , Europe

Summary

France saw a robust recovery from the Covid-19 shock but is now facing the repercussions of Russia’s war in Ukraine. In 2021, output rebounded by 6.8 percent and recovered to pre-crisis levels. The recovery was broad-based and faster than in most other European countries. While France is less directly exposed to the energy shock, the war in Ukraine is dampening the recovery by denting confidence and exacerbating supply-side difficulties. Inflation has surged but remains well-below peers thanks to energy price controls and subsidies. These and other measures to support purchasing power keep the fiscal deficit elevated despite the unwinding of Covid-19 support. While capacity utilization remains below pre-crisis levels, labor market conditions have further tightened.