France’s economy is a highly developed social market with significant state involvement in key industries. It accounts for around 4% of global GDP and is the tenth-largest economy in terms of PPP and nominal GDP, respectively. In 2017, the service sector accounted for 78.8% of France’s GDP, followed by the industrial sector with 19.5% of GDP, and the primary sector with 1.7% of GDP. France has a diversified economy. In 2020, France received the most foreign direct investments in Europe and spent the second-largest amount on development and research.
France’s rankings in 2020
The 2020 Bloomberg Innovation Index placed it among the world’s top ten most innovative nations. The 2019 Global Competitiveness Report classified it as the 15th most competitive country worldwide (up two notches compared to 2018).
It ranked as the fifth-largest trade country worldwide (second in Europe after Germany). France is also one of the most visited countries worldwide and the EU’s top agricultural producer.
The International Monetary Fund (IMF) estimates that France had a GDP per capita of $44,747 in 2022, ranking 26th in the world.
France ranked 22nd on the Corruption Perceptions Index in 2021 and scored 0.903 on the UN’s Human Development Index in 2021, which indicates very high human development.
The City of Paris’s Contribution to French Economic Growth
Paris is a major international city with one of the highest GDPs in the world. In terms of the number of companies listed in Fortune’s Fortune Global 500, it ranks as the top city in Europe (and third worldwide). The Paris metropolitan area’s economy, the largest in Europe along with London, generated US$738 billion or roughly 1/3 of France’s economy in 2018. Additionally, the Paris metropolitan area’s economy generates approximately 1/3 of France’s GDP, or about $1.0 trillion.
According to KPMG, Paris is the second most alluring city in the world this year. In 2017, Ernst & Young named La Défense, the Central Commercial District of Paris, as the top business district in continental Europe and fourth overall.
History of France’s Economic
With only four quarters of decline, France’s economy appeared to exit the recession of the late 2000s earlier than most other impacted economies. But France’s GDP only expanded by 0.2% in 2014 and 0.8% in 2013, indicating that the country’s growth stagnated between 2012 and 2014. With an increase of 0.8% in 2015, growth resumed. Following this, there was a growth of 1.1% in 2016, 2.2% in 2017, and 2.1% in 2018. The French Economic Observatory (OFCE [fr]) predicts that in 2022, the growth rate will be 1.2%.
Companies’ impact on the French Economy
France was the most represented European nation in the 2020 Fortune Global 500, with 31 firms ranking among the 500 largest corporations in the world, ahead of Germany (27 companies) and the UK (22).
France, ahead of Germany (35.2%), had the most weight on the Eurozone’s EURO STOXX 50 as of August 2020 (representing 36.4% of all assets). Several French businesses, like Air France in air travel and AXA in insurance, are among the biggest in their respective fields. Luxury and consumer goods are particularly important; L’Oreal is the largest cosmetics company in the world, and LVMH and Kering are the two biggest manufacturers of luxury goods.
Areva is a sizable nuclear energy firm, while GDF-Suez and EDF are two of the biggest energy companies in the world. The main provider of environmental services and water management is Veolia Environnement. Large construction firms include Bouygues, Vinci SA, and Eiffage; JCDecaux is the largest outdoor advertising company in the world, and Michelin is one of the top three tire producers. In terms of assets, Credit Agricole, BNP Paribas, and Société Générale are among the biggest banks worldwide. Among the biggest firms offering technology consulting services are Capgemini and Atos.
Total is the fourth-largest private oil corporation in the world, while Carrefour is the second-largest retail group in terms of sales; Danone is the fifth-largest food corporation in the world and the biggest mineral water supplier; The third-largest advertising company in the world is Publicis, whereas Sanofi is the fifth-largest pharmaceutical company in the world; Accor is the largest hotel chain in Europe, Groupe PSA is the sixth-largest automaker in the world, and Alstom is one of the top rail transportation corporations globally.
Rise and fall of the dirigisme
Under state coordination, France began an ambitious and extremely successful modernization effort. This dirigisme program, primarily carried out by governments between 1944 and 1983, included a variety of incentives for private firms to combine or take part in particular projects, as well as state control over some areas like transportation, electricity, and telecommunications.
Government spending
France had presidential elections in April and May 2012; the victor, François Hollande, pledged to end the country’s fiscal deficit by 2017 while opposing austerity measures. In addition to raising the rate of top taxes on incomes over a million euros and lowering the retirement age to 60, and offering individuals who have worked 42 years a full pension, the new government said it wanted to restore 60,000 jobs that had recently been cut from the public sector, regulate rent increases, and construct more public housing for the poor.
As a result of its victory in the legislative elections held in June 2012, Hollande’s Socialist Party now has the power to modify the French Constitution and immediately implement the promised reforms. Less than 50 basis points separate French government bond interest rates from German government bond interest rates after they dropped 30% to record lows.
COVID-19’s impact on the French Economy
The French government issued 10-year bonds with, for the first time, interest rates are negative in July 2020 amid the COVID-19 pandemic (which means that investors buying French bonds will pay, rather than receive, interest for owning French sovereign debt). The fourth-largest gold reserves in the world as of 2020 are found in France.
National debt
Since the early 1970s, the French government has had a financial deficit yearly. The debt held by the French government as of 2021 was equal to 118.6% of the country’s GDP. Credit-rating agencies issued a warning in late 2012 that France’s soaring debt levels threatened its AAA credit rating, increasing the likelihood of a future credit downgrade and increasing borrowing costs for the French government. France’s credit rating was lowered to AA+ in 2012 by the rating companies Moody’s, Standard & Poor’s, and Fitch.
The French Economy compared to the Economies of other countries of the same world
The French economy weathered the financial crisis better than most of its counterparts. France’s GDP only shrank in 2009 thanks to minimal reliance on foreign commerce and sustained private consumption rates. However, the recovery has been sluggish, and policymakers are more concerned about high unemployment rates, particularly among young people.
Top 7 Sectors of France’s Economic
- Industry
- Energy
- Agriculture
- Tourism
- Arms industry
- Fashion & luxury goods
- Education
Products include equipment, metals, chemicals, vehicles, aviation, textiles, cosmetic and luxury items, and electronics dominate the top industries in the nation. For goods like cheese and wine, food processing is a significant sector in France. More than 80 million tourists visit France each year, making it one of Europe’s most prosperous tourist destinations. France is one of the world leaders in nuclear energy, with about 78% of the nation’s electricity coming from nuclear sources.
Industry
According to the World Bank, France was the eighth-largest manufacturer in the world in terms of value added in 2019.
Energy
France, the world leader in nuclear energy and the home of the energy behemoths Areva, EDF, and GDF Suez, produces around 78% of the nation’s electricity now from nuclear sources, up from only 8% in 1973, 24% in 1980, and 75% in 1990. Reprocessing plants provide on-site storage for nuclear waste.
Agriculture
With nearly one-third of all EU agricultural land, France is the EU’s top agricultural power and the sixth-largest agricultural producer in the world.
Tourism
France is home to numerous culturally significant cities (Paris being the most notable), as well as beaches, coastal resorts, ski resorts, and rural areas that are popular for their natural beauty and tranquility. In addition, Lourdes, a town in the Hautes-Pyrénées département that welcomes several million tourists each year, draws a lot of religious pilgrims from France.
Arms industry
The French government is the primary client of the French arms industry, purchasing mostly warships, weaponry, equipment, and nuclear weapons. France was the world’s fourth-largest supplier of weapons between 2000 and 2015.
Fashion & luxury goods
The French firm Louis Vuitton Moet Hennessey (LVMH), which sold more than twice as much as its closest rival in 2017, is the greatest luxury company in the world by sales, according to figures provided by Deloitte for 2017. Paris is regarded as one of the top fashion cities in the world, if not “the world’s fashion capital.”
Education
In France, there are numerous subcategories within the highly centralized education system.
Primary education (enseignement primaire), secondary education (enseignement secondaire), and higher education (enseignement supérieur) are the three divisions.
Wealth of French
For 63 million people in 2010, the French possessed an estimated wealth of US$14.0 trillion.
The French are the wealthiest Europeans, making up more than a quarter of the continent’s wealthiest households.
