France’s Economy Beats Expectations, While Germany’s Falters.

France is gearing up for a presidential election in April, and President Emmanuel Macron is in a bruising campaign to serve a second five-year term. His government kept only minimal pandemic restrictions in place and instead encouraged people to get vaccinated in an effort to keep the country’s economy open.

But economists cautioned against overexuberance, warning of challenges posed by lingering effects of the pandemic.

“The shock in France in 2020 was stronger than the European average, and the French economic recovery in 2021 was in turn much more dynamic than the average recovery in Europe,” Charlotte de Montpellier, an economist with ING, wrote in a research note. “Nevertheless, the global imbalances generated by the pandemic, particularly in terms of prices, are now being felt, and overcoming their effects will be a complicated and important challenge for the recovery in the coming quarters.”

The latest surge of the Omicron variant in Germany served as an example of that imbalance when the government enacted more restrictions heading into the year-end shopping season. People entering stores were required to show proof of vaccination, and holiday markets were shuttered. These measures damped consumer spending, which contributed to the 0.7 percent contraction in the last quarter of 2021, according to data released by the Federal Statistical Office.

Overall, the German economy grew 2.8 percent in 2021, slightly above the 2.7 percent expected by officials. But it was still hampered by persistent bottlenecks in supply chains, especially in the country’s automobile industry, where domestic production slumped 12 percent last year compared with 2019, to 3.1 million vehicles.

Some economists expect Germany to struggle in the first quarter of 2022. Others foresee the potential for soft growth, provided that supply chains ease enough to allow manufacturers to begin filling their backlog of orders.

This week, the German government cut its forecast of annual growth to 3.6 percent, from a 4.1 percent forecast made in late October. Robert Habeck, the new economy minister, warned that “the consequences of the coronavirus pandemic are still being felt, and many companies are struggling with that.”


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