France: Economic and Political Overview
In this page: Economic Outline | Political Outline | COVID-19 Country Response
France is ranked as the world’s seventh largest economic power, just behind the United Kingdom and India (WEF, 2022). After suffering one of the sharpest economic contractions among EU countries in 2020 (-8%) due to the COVID-19 pandemic, France’s economy recovered strongly in 2021 (+6.8%). However, Russia’s invasion of Ukraine and the subsequent energy crisis dampened the recovery by reducing consumers’ purchasing power, denting confidence, and exacerbating supply-side difficulties (IMF). Economic growth slowed down to 2.5% in 2022, and according to IMF forecasts, it should further decrease to 0.7% in 2023 before strengthening to 1.6% in 2024.
In 2022, after a strong economic recovery from the COVID-19 pandemic in 2021, France’s economy was hit by an energy crisis driven by Russia’s invasion of Ukraine. Despite its reliance on nuclear energy and low dependence on Russian gas, France faced a sharp slowdown in economic activity and high inflation. A strong policy response was put in place to tackle the crisis, equivalent to over 2% GDP, and including gas and electricity price freezes, cash transfers to households, a fuel price rebate, and support for enterprises (IMF). Budget deficit decreased from -5.1% GDP in 2021 to -4.5% GDP in 2022, but it is expected to remain high in 2023 (-4.8% GDP) before decreasing in 2024 (-4.3%) thanks to fiscal consolidation measures (IMF). Public debt, which is one of the highest in the Eurozone, slightly decreased from 112.6% GDP in 2021 to 111.8% GDP in 2022. However, it is expected to rise again in 2023 (112.5% GDP) and 2024 (113.5% GDP). Driven by supply chain bottlenecks and the energy price shock, inflation soared from 2.1% in 2021 to 5.8% in 2022, but remained well below the EU average, largely due to energy price controls and subsidies (IMF). It is expected to remain high in 2023 (4.6%) before declining to 2.4% in 2024 (IMF). The priorities for 2023 include tackling inflation and protecting households, minimising the rise in unemployment, accelerating ecological transition and supporting healthcare and education. The France 2030 plan aims at boosting critical innovation and investment. In addition to the risk posed by new strains of the COVID-19 virus and waning vaccine effectiveness, France faces structural challenges: high structural unemployment, weak competitiveness, and high public and private debt burdens. High unemployment rates, especially among youth, remain a growing concern for policymakers.
Unemployment rate, which peaked at 8% in 2020, declined to 7.5% in 2022 and is expected to remain around that level in 2023 (7.6%) and 2024 (7.5%) (IMF). The deployment of short-time work scheme limited large-scale employment losses but continued efforts to boost worker skills and address inefficiencies in the educational system will be key (IMF). Social mobility remains low and the employment rates of many disadvantaged groups are poor.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 2,635.92 | 2,957.42 | 2,784.02 | 2,923.49 | 3,018.89 |
| GDP (Constant Prices, Annual % Change) | -7.9 | 6.8 | 2.6 | 0.7 | 1.3 |
| GDP per Capita (USD) | 40,385 | 45,186 | 42,409 | 44,408 | 45,729 |
| General Government Balance (in % of GDP) | -5.8 | -5.2 | -4.4 | -4.6 | -4.1 |
| General Government Gross Debt (in % of GDP) | 114.7 | 112.6 | 111.1 | 111.4 | 112.4 |
| Inflation Rate (%) | 0.5 | 2.1 | 5.9 | 5.0 | 2.5 |
| Unemployment Rate (% of the Labour Force) | 8.0 | 7.9 | 7.3 | 7.4 | 7.3 |
| Current Account (billions USD) | -47.36 | 10.61 | -47.66 | -35.82 | -21.02 |
| Current Account (in % of GDP) | -1.8 | 0.4 | -1.7 | -1.2 | -0.7 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
France is the largest agricultural power in the European Union, accounting for one-fourth of the EU’s total agricultural production. Nevertheless, the agricultural sector only represents a very small part of the country's GDP (1.6%) and employs 3% of the population (World Bank). French agricultural activities receive significant subsidies, especially from the European Union. Wheat, corn, meats and wine are France's main agricultural products.
France's manufacturing industry is highly diversified; however, the country is currently undergoing a de-industrialisation process, which has resulted in the outsourcing of many activities. Industry represents 16.7% of GDP and employs a fifth of the active workforce (World Bank). The key industrial sectors in France are telecommunications, electronics, automobile, aerospace and weapons.
The tertiary sector represents 70.3% of the French GDP and employs 77% of the active workforce (World Bank). France is the leading tourist destination in the world with a record of 66.6 million foreign visitors in 2022 (GlobalData). The discovery of the cultural and gastronomic heritage of France and shopping are the main activities popular with foreign tourists.
In 2022, due to the war in Ukraine, most businesses faced a surge in production costs, in addition to the pre-existing pandemic-related supply difficulties (Coface). Despite this challenging environment, the tourism sector rebounded strongly, with international revenues worth almost EUR 57 billion in 2022 (Atout France).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 2.5 | 20.4 | 77.0 |
| Value Added (in % of GDP) | 1.6 | 16.7 | 70.3 |
| Value Added (Annual % Change) | -0.6 | 7.0 | 6.6 |
Source: World Bank, Latest data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
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For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.
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