French central bank raises growth outlook again to 6.7% – Villeroy

PARIS (Reuters) -France’s central bank has raised its growth forecast again for 2021, to 6.7% versus 6.3% in September and 5.8% in June, as the emergence of the new Omicron coronavirus variant does not seem to impact the economic outlook, its head Francois Villeroy de Galhau said on Wednesday.

“French growth remains robust. The heads of companies are slightly more cautious regarding the future, but we have caught up with pre-crisis levels since last September and now we’re above it”, Villeroy told RTL radio, giving a preview of the central bank’s quarterly forecasts due Dec. 20.

“Let me give you a pretty impressive figure this morning – we’ll publish the full set of our forecasts on Dec. 20 – the 2021 French growth will stand at 6.7% in our forecasts,” Villeroy said.

“That figure is much higher than what was expected during the first half of the year and the highest growth figure in more than 50 years.”

The euro zone’s second-biggest economy has outperformed most expectations in recent months after the country’s vaccination campaign picked up speed in the second quarter and coronavirus restrictions were eased, allowing most businesses to return to work.

But, like many other European countries, France is fighting a renewed spread of the disease fuelled by the Delta variant, and is gearing up to contain the Omicron variant.

Prime Minister Jean Castex said on Monday night clubs would be closed ahead of Christmas and social distancing measures tightened, but ruled out a new lockdown because nearly 90% of eligible people have been vaccinated.

Villeroy, who is also a member of the ECB’s policy-setting governing council, said French growth faced two main risks for now: labour shortage and shortage of supply.

He also said inflation should ease next year in France, with its level likely to be below 2% at the end of 2022.

(Reporting by Benoit Van Overstraeten; Editing by Dominique Vidalon and Alex Richardson)