The French economy is on course to rebound 6% this year and will almost regain its pre-pandemic size by the end of 2021 thanks to a consumer boom, statistics agency INSEE has said.
That is a more optimistic outlook than the finance ministry, which has stuck with its forecast for 5% growth this year due to uncertainty about the spread of the new COVID-19 Delta variant.
In its economic outlook, INSEE said activity had held up better than expected in the second quarter and was rebounding strongly after France's third lockdown was lifted in mid-May and restrictions further eased since then.
It forecast the euro zone's second-biggest economy grew 0.7% in the second quarter from the previous three months, up substantially from the 0.25% it had previously pencilled in.
Earlier this week, INSEE said its consumer confidence index jumped to 102 in June from 98 in May, surpassing economists' average expectation for a reading of 100 in a Reuters poll.
Surge In Consumer Spending
The reopening of non-essential retail outlets in May released a surge in consumer spending that has shown little sign of easing as other restrictions are subsequently phased out, according to payment card data.
While the economy was still 4% smaller than its pre-crisis size in May, it will have grown to just 0.1% less by year-end, INSEE estimated.
That would mean an expansion of 3.4% in the third quarter from the previous three months and another 0.7% in the final quarter, INSEE forecast.
It expected the labour market to track the general economic recovery, returning to pre-crisis levels of employment by year-end with 300,000 jobs added over the course of the year.
The unemployment rate would remain largely stable, however, at 8.2% at end-2021, as the number of people entering the labour market largely matches the number getting new jobs, INSEE said.