The French economy returned to growth in the first quarter of 2021, sustained by enthusiastic consumer spending, despite crippling Covid-19 restrictions which were re-imposed earlier this year in an effort to curb a surge in infections.
French Gross Domestic Product (GDP, a measure of the wealth a nation can produce) edged up 0.4 percent compared to the final three months of 2020, a year that saw the coronavirus pandemic plunge countries worldwide into historic recessions, the Insee statistics agency said.
"However, the economic rebound was limited, as GDP is still 4.4 percent below its level of the fourth quarter 2019," before the Covid-19 pandemic began, the agency said.
Insee had originally forecast one percent growth for the quarter, but in March French authorities began ordering business closures and travel bans in several regions ahead of a third national lockdown implemented in April.
President Emmanuel Macron announced Thursday a phased reopening of the economy by the end of June, hoping the vaccination drive will allow shops, restaurants and cultural venues to return to activity with a semblance of normalcy.
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Consumer spending dropped 1.1 percent in March, but staged a "moderate rebound" of 1.2 percent for the first quarter as a whole, Insee said.
"Households remain confident, they have high levels of savings, and businesses are also sitting on large cash piles," said Selin Ozyurt, senior economist at the credit insurance and research group Euler Hermes.
"So if the government can vaccinate people quickly, we could see a very strong rebound," she said, deeming the government's target of five percent growth this year attainable.
Coronavirus recovery fund worth 750 billion euros
The government has injected billions of euros to keep businesses afloat despite the closures, and this week France and other countries submitted plans for spending their share of the EU bloc's coronavirus recovery fund worth 750 billion euros.
But headwinds remain, with Insee reporting that inflation jumped 1.3 percent in April compared to a year earlier, which could curb consumers' enthusiasm.
France's all-important tourism sector is also worried as summer approaches that international travel will remain curbed by contagion fears.
"The unexpected increase in French GDP in Q1 suggests that the economy has proved more resilient to the poor health situation and associated restrictions than we had thought," said Jessica Hinds, Europe economist at Capital Economics.
"Nevertheless, with France in a full national lockdown for more than half of Q2, we doubt that a sustained recovery in activity will be underway before the summer," Hinds said.