The economy of France is one of the largest in the globe, and it ranked 7th largest economy globally in 2019. the economy of this country is free-market-oriented and its highly developed ranking among the top ten largest according to purchasing power. In the European Union, France’s economy is the second-largest just below Germany. Its economy is diversified. One of the vital sectors in France’s economy is the chemical industry, which helps in developing manufacturing activities and contributes highly to the growth of the economy. Moreover, the tourism sector plays a significant role in its economy since the country has most of the frequently visited sites across the globe. The city of Paris is one of the most elegant in the world.
France’s gross domestic product per capita was ranked as 19th across the globe in 2018 by the IMF with $42,878 per inhabitant. The country has a high human development index of 0.891. The economy of France was in recession in the late 2000s and suffered four quarters of contraction. However, the economy gained growth between 2012 and 2014, where the economy expanded by 0.8 percent and 0.2 percent in 2013 and 2014, respectively. The country has high ranked corporations like Air France and AXA in the insurance industry. The economic sectors of the countries economy include industry, energy, agriculture, tourism, the arms industry, transport, labor market, and external trade (Baum, 2016).
Before Coronavirus pandemic Analysis
As in most OECD countries, over the last ten-year productivity growth has decreased. France experienced a pick to its economic growth in 2015 and 2016, where there was a growth of o.8 percent and 1.1 percent, respectively. The year 2017 and 2018 had a growth rate of 2.2 percent and 2.1 percent, respectively. From 500 biggest companies across the globe in 2018, 28 were from France, and this made the country rank 5th in the fortune global behind Germany, US, Japan, and China. The GDP of the country in 2019 grew 1.3 percent compared to the year 2018 (Organisation for Economic Co-operation and Development Staff 2011). France had a GDP of $ 2,708,067 million in 2019, which made the country rank 6th out of the possible 196 countries. The GDP per capita the same year was $40,411, which was $2,542 higher than the year 2018 (See Appendix 1 for GDP Information).
According to the statistics and data, the year 2019 was quite favorable concerning the unemployment rates in France. For instance, in the last quarter of 2019, the unemployment rate in the country declined to 8.1 percent. This rate was the lowest since October 2008 and was below the expectations of the market, which was 8.5% (See Appendix 2). the number of unemployed in the last quarter of 2019 decreased by 85 000 people. Moreover, the long term unemployment rate in the country declined to 3.2 %, which was the lowest since 2019 second quarter. The employment rate, therefore, increased by 0.7 points to 65.9 percent, which was quite high. The first quarter of 2019 recorded an 8.7 percent unemployment rate while 8.5 percent, 8.6 percent, and 8.1 percent were recorded in the second, third, and last quarter of the year, respectively (OECD 2011).
France’s government has experienced a budget deficit in every financial year since the early 1970s. The debt of the French government reached 2,331 billion Euros in 2019, which was equivalent to 99.2 percent of the French Gross Domestic Product. The debt levels of the country are high, and in 2012, the credit rating agencies that these levels risked France’s AAA credit rating. This could raise the possibility of a credit downgrade in the future or higher borrowing costs for the government. The standard of living in France is quite high, while life expectancy is among the highest in the world (Alexander et al., 2018).
The inflation rate in January 2019 was -0.47 percent. This rate of inflation was o.49 less to what was recorded in December 2018 and 0.38 less than what was recorded in January 2018 (See Appendix 3). one of the leading sectors that contribute to the GDP is the industrial sector. This economic sector is made up of construction, aerospace, defense, textile, civil engineering, chemical, telecommunications, shipbuilding, pharmaceuticals, and automobile production. Moreover, other sectors, like the energy sector, contributed to the growth of the economy. Nuclear power in France accounts for more than 78 percent of the national electricity production. Agriculture, tourism, and transport sectors also made a considerable contribution to the economy through employment and funds collected in 2019 (Publishing, OECD, 2012).
During Corona Virus Pandemic Analysis
The coronavirus pandemic, which originated from Wuhan, China, is currently ravaging across the globe, causing deaths and affecting the economic growth of various countries negatively. In March 2020, the infections in France have gone very high, and the government put multiple measures to minimize the spread of the virus. This made significant economic shutdowns across the countries when the lockdown was announced (Nicola et al., 2020). The French economic activity slowed down. Currently, only 65 percent of the economic activity and household spending is taking place due to the coronavirus outbreak. The gross domestic product of France has shrank-ed by 5.8 percent between January to March since the investment and consumer spending declined sharply during this time of the outbreak.
The inflation rate annually in France decreased to 0.7 percent in March 2020 from 1.4 percent in February 2020. this inflation rate was the lowest since 2017 July, as service cost increased at a softer pace. This decrease in the rate of inflation is brought about by the prices fell for both energy and manufactured products during the coronavirus pandemic. However, the inflation rate on food rose to 1.9 percent from 1.8 percent in February 2020. due to this pandemic, consumer price inflation is expected to slow. Various sectors, like tourism and transport, contribute a lot to the economy of France. However, they are profoundly affected during this period since people are staying home as a precaution to minimize the virus spread (Nicola et al., 2020).
As the pandemic bites, the unemployment rate in France and other countries that have enforced lockdowns rose. In France, more than 10.2 million employees are currently being paid by the French government. Major sectors in the French economy are on shutdown, and approximately 9 out of 10 employees are presently unemployed, those in hotels, restaurants, and the construction industry. The French government approximates that the public sector deficit could rise to 9 percent of the GDP in 2020 up from 3 percent in 2019. with the lockdown in action, various sectors like tourism have been struck. The tourism sector offers employment to quite a large number of people in France. That means even the money circulation is deficient, leading to low consumption (Nicola et al., 2020).
Post-Coronavirus Analysis And Recommendations
the coronavirus pandemic is expected to cause a shrink of about 8 percent to the economy of France. The country is set for its most significant shutdown economically since the year 1945 due to the impact of the coronavirus pandemic. France, together with other of its counterparts in Europe, are currently freezing a large part of their economy which will have significant effects after the epidemic is over. The GDP of France is expected to drop by 6 percent in the year 2020. the recession might even be worse than that of 2008, according to a consensus among economists. The coronavirus pandemic will profoundly affect the future (2020-2021) production, unemployment rate, and inflation rate (Nicola et al., 2020). Investment and consumption are now at a halt, and to address the economic impact that will be caused will be very difficult.
The coronavirus pandemic will make France economy surge into another economic crisis like the recession of 2008. The epidemic will come under control with continued and less disruptive measures, immunity, and vaccines or drugs. The French government can implement and act on various monetary policies and enact reforms that would help the country recover economically from the coronavirus crisis. With the domestic demand depletion, for instance, the government can decide to enact reforms to increase the exports from France further and renew credibility. The French government will need various changes in different sectors like fiscal measures reforms, labor market reforms, and financial market reforms. The government of France will also have to guarantee the functioning of essential areas such as food production, distribution, regular health care, and necessary infrastructure. Even if France dwells on these domestic monetary policies, there is a high need to maintain international trade and cooperation for the maximization of a quick recovery economically. During the recession period caused by the Coronavirus pandemic, various more monetary policies like increasing the number of loans, reducing interest on loans, increasing the money supply will have to be applied to overcome it (In Canuto, In Ghosh, 2013).//