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France Economy: Strongest Crisis Performer Among EA Big Four

The Republic of France's (AA (high), Stable) economy performed the strongest during the global disruptions of the last three years compared to its large-economy Euro area (EA) peers: Germany (AAA, Stable), Italy (BBB (high), Stable) and Spain (A, Stable). The French economy is comparatively more closed and more dependent on government consumption - features that supported domestic demand and helped withstand this particular series of shocks. According to the IMF, France's cumulative economic growth performance by 2024 relative to 2019 will remain the largest among the EA big four. A challenge for France is that its economic structure comes with a high price tag and is perhaps less appealing once crisis conditions pass.

-- France's economy performed best among the four largest EA economies over the three-year crisis period.
-- The country's economic structure helped it withstand the external shocks.
-- France's economic model has some downsides once the crises have passed.

“The French government's involvement in the economy can be beneficial during times of crisis when demand is high for a secure social safety net,” said Jason Graffam, Vice President of the Sovereign Group at DBRS Morningstar. “However, it’s economic model has led to slow budget repair. This limits the government's spending power to help cushion its economy from the next external shock, whenever it arrives.”