Current economic developments

Post n°205

Globalisation and uncertainty

Published on 02/23/2021

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By Olivier de Bandt, Jean-Charles Bricongne and Lionel Fontagné

The environment that economic policy makers face today is characterised by both a large amount of uncertainty and a high level of globalisation. This blog post highlights a perception of increasing uncertainty by economic agents when external shocks become more frequent, and a faster transmission of these shocks when the economy is more open, or when traded goods are produced within more sophisticated "value chains". Globalisation has thus heightened the macroeconomic impact of uncertainty on the real economy, amplifying the consequences of international uncertainty shocks.

Chart 1: Uncertainty and openness of the euro area current account (1999-2019)
Chart 1: Uncertainty and openness of the euro area current account (1999-2019)
Updated on 02/23/2021 16:39
Post n°204

The economic channels of the Covid-19 crisis in France

Published on 02/17/2021

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By Raphaël Cancé, Jean-François Ouvrard and Camille Thubin

The health crisis has caused an unprecedented economic shock. In this post, we describe its different channels using the FR-BDF forecasting model. In 2020, shocks to private domestic demand and to trade performance dominate. In 2021 and 2022, public support is expected to speed up economic recovery, but supply shocks should slow down the rebound.

Chart 1: Deviation of projected activity in December 2020 from the pre-crisis path
Chart 1: Deviation of projected activity in December 2020 from the pre-crisis path Source: Banque de France (FR-BDF model, December 2020 macroeconomic projections)
Updated on 02/17/2021 09:05
Post n°192

Speed up restructuring proceedings in response to Covid-19?

Published on 12/10/2020

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By Chloé Zapha

Collective restructuring proceedings could be improved in order to deal effectively with ailing firms. Speeding up the process of corporate debt restructuring - starting with the safeguard procedure - could help as many firms as possible to recover.

Chart 1: fewer receivership proceedings have been initiated than in previous years since the beginning of lockdown
Chart 1: fewer receivership proceedings have been initiated than in previous years since the beginning of lockdown Source: France Stratégie (data from the BODACC, calculations by Cros, Epaulard and Zapha)
Updated on 12/10/2020 10:41
Post n°186

Large enterprises’ investment in times of crisis

Published on 10/20/2020

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By Anne Duquerroy and Clément Mazet-Sonilhac

Preserving companies' investment capacity as they emerge from the Covid-19 crisis is a key issue of economic policy, as shown by the emergency measures taken by the ECB and, in France, by the government. Indeed, access to external financing is a major determinant of investment. A financing shock, such as the 2008 crisis, could lead to a sharp decline in the investment rate of major French groups.

Cost of external financing for non-financial corporations (%)
Chart 1. Cost of external financing for non-financial corporations (%) Source: Gilchrist and Mojon (2017)
Updated on 10/20/2020 18:39
Post n°185

The Bank's VSE-SME correspondents during the health crisis

Published on 10/15/2020

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By Sylvie Bonneau

During the lockdown, the Banque de France's network of VSE-SME correspondents was greatly called upon to guide entrepreneurs in their requests for financing. Managers' concerns changed during this period.

Chart 1 – Managers’ meetings with VSE-SME correspondents and crisis-related needs
Chart 1 – Managers’ meetings with VSE-SME correspondents and crisis-related needs Source: Banque de France
Updated on 10/15/2020 18:08
Post n°184

Measuring international travel during the Covid-19 pandemic

Published on 10/07/2020

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By Florian Le Gallo and Kevin Schmitt

The Covid-19 pandemic has severely disrupted international tourism. As foreign traveller surveys are no longer conducted, the Banque de France has brought into play innovative information sources, such as payment card data, to assess the scale of the shock. After a massive drop in receipts since March, European visitors returned to France during the two summer months.

Chart 1: France’s international tourism receipts (in EUR billions) Source: Banque de France.
Updated on 10/07/2020 14:04
Post n°183

Towards a sustainable upturn in official development assistance?

Published on 10/02/2020

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By Luc Jacolin and Khalil Bechchani

Official development assistance (ODA) should be bolstered in 2020 by the international response to the Covid-19 crisis, whose impact in low-income countries is still uncertain. The main challenge is to ensure that the efforts undertaken will be sufficient and sustainable: increasing ODA is desirable if the sustainable development goals for 2030 are not to be compromised.

Chart 1: Changes in financial flows entering LICs (in USD billions)
Chart 1: Changes in financial flows entering LICs (in USD billions) Sources: World Bank, OECD and Banque de France estimates for 2020.
Updated on 10/02/2020 18:11
Post n°182

How to interpret the rebound in French GDP in 2021-2022?

Published on 09/30/2020

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By Pierre Aldama, Hadrien Camatte, Jean-François Ouvrard and Paul Sabalot

According to the Banque de France macroeconomic projections published on 14 September 2020, after declining by 8.7% in 2020, GDP growth is expected to stand at 7.4% in 2021 and 3.0% in 2022. Despite this apparently impressive rebound, the economic catching-up process should in reality only be very gradual. GDP should only return to its pre-crisis level at the beginning of 2022. This post provides a few explanations of these unusual growth rates.

Chart 1: France: Projections of the volume of GDP, compared to the post-2008 trajectory
Chart 1: France: Projections of the volume of GDP, compared to the post-2008 trajectory Sources: Insee, Banque de France
Updated on 09/30/2020 09:04
Post n°181

State aid and Covid-19: a European dilemma

Published on 09/25/2020

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By Emilie Hermet and Dorothée de Franclieu

In response to the economic impact of the Covid-19 crisis, the European Commission has authorised a temporary easing of the framework governing the use of State aid. While this measure was necessary in an emergency situation, it is likely to distort competition in the internal market if it is used on a wide, prolonged and heterogeneous basis.

Chart 1: Breakdown by country of State aid ceilings authorised by the Commission from 19 March to 8 July 2020
Chart 1: Breakdown by country of State aid ceilings authorised by the Commission from 19 March to 8 July 2020 Sources: European Commission data (estimated ceiling amounts) and author's calculations. The amount of State aid paid out can be de facto much lower than the ceiling amount, in particular in the case of loan guarantees (e.g. Germany).
Updated on 09/25/2020 17:37
Post n°180

Do developments in corporate organisational structures pose financial risks

Published on 09/16/2020

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By Vivien Levy-Garboua, François Mouriaux, Tatiana Mosquera Yon and Mylène Sabatini

Since the 2008 financial crisis, captive financial institutions (special-purpose financial holding companies), subsidiaries of non-financial corporations (NFCs), have helped to drive growth in the financial sector, causing it to outstrip GDP growth. This trend reflects the increasingly complex and international organisational structures adopted by NFCs, but does not appear to have been accompanied by growth in risky financial transactions by these entities.

Chart 1a. Foreign direct investment by country, liabilities, % of GDP
Chart 1a. Foreign direct investment by country, liabilities, % of GDP Source: ECB
Updated on 09/16/2020 18:04

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