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Economic and political outline

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In this page: Economic Outline | Political Outline | COVID-19 Country Response

 

Economic Outline

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

France is ranked as the world’s seventh largest economic power, just behind the United Kingdom and India. The country’s recovery from the 2008 economic crisis has come later than in other European countries and remained fragile due to structural imbalances. In 2020, due to the COVID-19 pandemic, France suffered one of the sharpest economic contractions among EU countries (-8%), but the economy started to recover in 2021. According to IMF estimates, GDP growth amounted to 6.3% in 2021, driven by public support and by solid private sector led investment. Growth is expected to moderate to 3.9% in 2022 and 1.8% in 2023, subject to continued containment of COVID-19, normalization of supply chain difficulties, and a continued accommodative policy environment (IMF).

In 2020, France was among the most affected countries from the COVID-19 pandemic, but the economy started to recover in 2021 thanks to expansive fiscal support and effective containment of the virus (IMF). The large emergency support package adopted in 2020, which focused on supporting households and firms by preserving jobs and providing liquidity, was increased in 2021 in the context of the third partial lockdown. The total envelope for crisis and recovery measures for 2020–22 amounted to 28% of the country’s GDP (IMF). As a result of these support measures and falling revenues, budget deficit further increased to -7.5% GDP in 2021, and is forecast to decrease but remain at a high level in 2022 (-4.6% GDP) and 2023 (-3.9% GDP) (IMF). Public debt, which was already one of the highest in the Eurozone, soared to 115.8% GDP in 2021, and is forecast to stay very high in 2022 (113.5% GDP) and 2023 (114.6% GDP). Due to spike in energy prices and supply chain bottlenecks, inflation increased from 0.5% in 2020 to 2% in 2021 (IMF). It is expected to drop to 1.6% in 2022 and 1.2% in 2023 (IMF). The priorities for 2022 will include the continuation of the implementation of the Plan de Relance designed to support French businesses, minimise the rise in unemployment, and facilitate the green and digital transitions. The France 2030 plan will aim at boosting critical innovation and investment. In addition to the risk posed by a prolongation of the health crisis into 2022 due to increasingly virulent new strains of the 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 was declining before the pandemic, reached an estimated 8.1% in 2021 and is expected to increase to 8.3% in 2022 before declining to 8% in 2023 (IMF). The deployment of short-time work scheme limited large-scale employment losses. Social mobility remains low and the employment rates of many disadvantaged groups are poor.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 2,728.832,624.42e2,940.433,140.033,281.71
GDP (Constant Prices, Annual % Change) 1.8-8.0e6.73.51.8
GDP per Capita (USD) 41,990e40,299e45,02847,95249,975
General Government Balance (in % of GDP) -2.1-6.3e-7.5-4.6-3.9
General Government Gross Debt (in % of GDP) 97.6115.1e115.8113.5114.6
Inflation Rate (%) 1.30.5e2.01.61.2
Unemployment Rate (% of the Labour Force) 8.48.0e8.18.38.0
Current Account (billions USD) -7.93-49.85-48.99-44.34-34.47
Current Account (in % of GDP) -0.3-1.9-1.7-1.4-1.1

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

 

Main Sectors of Industry

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 16.4% 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 71.2% 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 91 million foreign visitors in 2019. The discovery of the cultural and gastronomic heritage of France and shopping are the main activities popular with foreign tourists.

In 2020, due to the COVID-19 pandemic, the lockdown measures caused an unprecedented loss of activity in virtually all sectors. The most sharply impacted include tourism, automobiles, transport and aerospace, while the agri-food and pharmaceuticals sectors have been resilient. Despite the persistence of the pandemic, most sectors started to recover in 2021. Sales in aeronautics were up 24% in Q2 2021 compared to Q1 2021 (Coface), and tourism growth was estimated at 35% pour 2021 (WTTC).

 
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 16.4 71.2
Value Added (Annual % Change) -0.1 -11.2 -7.4

Source: World Bank, Latest available data.

 

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Indicator of Economic Freedom

Definition:

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.

Score:
65,7/100
World Rank:
64
Regional Rank:
34

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

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.

Score:
7.74/10
World Rank:
15/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

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Political Outline

Current Political Leaders
President : Emmanuel Macron (since 14 May 2017; re-elected for a second term on 24 April 2022)
Prime Minister: Élisabeth Borne (since 16 May 2022)
Next Election Dates
Presidential elections: April 2027
Senate: September 2023
National Assembly: June 2022
Current Political Context
Since his victory in the April 2017 presidential elections over Marine Le Pen (Rassemblement National, far right), President Emmanuel Macron and his centre-liberal party, La République En Marche (LaREM) have embarked on a vast reform program, aimed at making the labor market more flexible. However, the program to reform the pension system (abolition of special regimes), triggered a large-scale national strike. Since 2020, the  political context was particularly affected by the Covid-19 pandemic. The government supported activity via a EUR 100 billion (4% of GDP) recovery plan. The regional elections of June 2021, characterised by a low turnout of less than 35%, produced a clear defeat for Le Pen and Macron’s parties, and clear wins for incumbents from the traditional parties the Republicans (LR, right) and the Socialist Party. Nonetheless, as the polls predicted, the 2022 presidential elections resulted in a duel between Macron and Le Pen, amid failed attempts to unify the left. In April 2022, Macron was re-elected for an additional 5-year term, but abstention reached a 50 year record, and Le Pen managed to gather 41.46% of the votes. Criticised for its slow COVID-19 vaccination rollout at the beginning of the crisis, France presented one of the highest vaccination rate of the EU in 2021. The question to transform the COVID-19 health pass into a vaccine pass stimulated a debate.

On the international scene, the president intended to strengthen the integration of the euro zone by revitalizing the Franco-German partnership; defend the fight against climate change; and promote a more uninhibited relationship between France and Africa as illustrated by the formalization of the end of the CFA franc and the France-Afrique summit in October 2021. Perceived as a disruptor making unilateral statements without prior consensus with the EU, Macron moved closer to Syria, vetoed the accession to the EU of Albania and Macedonia, and criticized the weakness of NATO. Among Macron’s priorities for the French Presidency of the Council of the EU are a reform of the visa-free Schengen travel zone, migration and Europe’s history.
Main Political Parties
- The Socialist Party (PS): centre-left
- The Republicans: centre-right
- En Marche: centre, new liberal political movement founded by Emmanuel Macron
- National Rally (RN): far-right; first parliamentary representation in 1997 and gaining support amid growing voter scepticism towards the EU
- The Left Front (FDG): left to far-left
- The Democratic Movement (MoDem): centrist
- Europe Ecology - The Greens (EELV): emphasises ecology and peaceful and sustainable lifestyles
- La France Insoumise (Unbowed France) (FI): far-left
- French Communist Party (PCF): communism, soft euro-scepticism
Type of State
France is a Republic, parliamentary democracy combined with presidential power.
Executive Power
The President of the Republic is the Head of State. He/She is elected by direct universal suffrage for five years. He/She appoints the Prime Minister and his/her Government at the suggestion of the Prime Minister. The Prime Minister sets the amount of the State's expenses and revenue, and prepares some bills.
Legislative Power
The parliament is composed of the Senate and the National Assembly. The 348 senators are elected by indirect universal suffrage for nine years, renewable by a one-third majority vote every three years. The 577 deputies (MPs) are elected by direct universal suffrage. They examine bills and private bills successively, vote laws and monitor the Government. The economic, social and environmental council has an advisory function (optional or compulsory) within the framework of the legislative process.
 

Indicator of Freedom of the Press

Definition:

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.).

World Rank:
34/180

Source: World Press Freedom Index, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

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.

Ranking:
Free
Political Freedom:
1/7
Civil Liberties:
2/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in France, please visit the French government platform with the official data. Official information on the progress of the epidemic in France is consolidated by Santé publique France. The agency provides a daily epidemiological update, which includes key national figures. Further details on the epidemic is available on the government’s data platform.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures
To find out about the latest public health situation in France and the current sanitary measures in vigour, please consult the French government platform Info Coronavirus COVID-19 including the up-to-date information on the containment measures put in place and public health recommendations.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including 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.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the portal of the French Directorate-General for Customs and Indirect Duties.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to France on the International Trade Centre's COVID-19 Temporary Trade Measures
webpage.
Economic recovery plan
For the information on the economic recovery scheme put in place by the French government to address the impact of the COVID-19 pandemic on the national economy, please visit the website of the French Ministry of the Economy. Further information on the economic emergency measures is available here.
The information on the EU’s economic response to COVID-19 and the actions to minimise the fallout on the EU member states’ economies of the COVID-19 outbreak is available on the websites of the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the French government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to France in the IMF’s Policy Tracker platform.
Support plan for businesses
For the information on the local business support scheme established by the French government to help small and medium-sized companies to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the portal of the French Ministry of Economy and Finance Coronavirus COVID-19: Business Support Measures (in French).
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.
Support plan for exporters
To find out about the support plan for exporters put in place by the French government, please consult the support plan for French exporting companies available (in French) on the French Ministry of the Economy website. The "Support plan for French exporters" is also available in English on the French Treasury Department (DG Trésor) website.
 

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Latest Update: June 2022