French Central Financial institution Trims Financial Outlook By Reuters

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© Reuters. FILE PHOTO: Facade of the headquarters of the Bank of France “Banque de France” in Paris

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PARIS (Reuters) – The French economy will rebound over the next year as coronavirus restrictions are lifted, albeit not as quickly as previously expected, the central bank forecast on Monday.

After falling around 9% this year, the second largest economy in the euro area will see growth of around 5% in 2021 and 2022 before dropping to just over 2% in 2023, the Bank of France forecast in its quarterly outlook.

The upswing was pushed back after a second lockdown was imposed in late October following a new outbreak of infection that is gradually coming under control.

Before the second wave, in September the bank had forecast a decline of 8.7% this year and growth of 7.4% in 2021 and 3% in 2022.

The French economy will not return to pre-crisis production levels until mid-2022, while this was expected at the beginning of next year.

Despite the expected recovery, the unemployment rate is expected to rise further to 11% in the first half of 2021 before dropping to 9% by the end of 2023.

Based on the results of its monthly business sentiment survey, the central bank said the economy was 8% below normal in December, meaning that output would contract 4% quarter over quarter in the fourth quarter.

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