Despite a rise in Covid-19 Delta variant cases, the French economic outlook has improved over the summer as the vaccination rollout helped end the disruptions to normal activity, fueling a brighter outlook for the France country-specific exchange traded fund.
Insee confidence surveys and high-frequency indicators revealed France’s economic activity continued to near pre-pandemic levels over July and August, and the economy should fully bounce back the end of the year, Bloomberg reports. The French statistics agency also upwardly revised its 2021 economic growth projections to 6.25% from 6% in July.
“The really notable fact is that the recovery continued despite going through a fourth wave of the epidemic,” Insee economist Julien Pouget told Bloomberg.
The upbeat Insee report on the Eurozone’s second-largest economy reflected a bright spot in the euro bloc, whereas other indicators indicated a worsening outlook due to a spike in coronavirus infection cases and ongoing supply problems. For instance, according to a separate survey, investor confidence in Germany dipped for the fourth consecutive month.
“Our scenario sees industry and in particular automobile production partly held back by these problems between now and the end of the year,” Pouget said. “That could be a positive element if the tensions unwind in the medium term.”
The French government has resisted new nationwide restrictions. At the same time, the number of Covid-19 cases rose during the latest summer wave as it pushed forward a vaccination campaign with over 77% of those over-twelves fully vaccinated. Furthermore, the government has implemented a health passport to dine out or visit museums and cinemas, which Insee argued had only a moderate impact that will likely be temporary on the economy.
Investors interested in gaining exposure to the French markets can look to the targeted iShares MSCI France ETF (NYSEArca: EWQ). Additionally, the Vanguard FTSE Europe Index Fund ETF Shares (NYSEArca: VGK), JPMorgan BetaBuilders Europe ETF (BBEU), and iShares MSCI Eurozone ETF (BATS: EZU) provide a broader European market play, with France making up the second-largest country weight within the funds.
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