The following developments are the main elements of the management report mentioned at I of article L. 451-1-2 of the French Monetary and Financial Code and in article 222-3 of the General Regulation of the AMF, which must include the information mentioned in articles L. 225-100, L. 225-100-2, L. 225-100-3 and in the second paragraph of article L. 225-211 of the French Commercial Code.
Other information corresponding to elements required in the management report is to be found in Section 10.6 “Cross-reference table for the management report”.
The following should be read in conjunction with the consolidated financial statements and related notes. They contain information concerning the Groupe’s future objectives which imply risks and uncertainties, including, in particular, those described in Section 2 “Risks and risk management”.
In 2021, the global economy posted solid growth of 6.1% due to the reopening of economies and the still very favorable fiscal and monetary policies to support business. This increase arrived after the sudden slowdown in 2020 of -3.8%. Overall, the economic effects of the unprecedented global health crisis are no longer visible. Country situations varied considerably. Although China appears to be the big winner with an increase of +8% in its GDP after +2.3% in 2020, the structural slowdown of its economy is nevertheless underway. It could be overtaken by the health crisis and the authoritarian management that was favorable to it until now. The United States (+5.6% in 2021) managed to offset the decline in activity in 2020 (-3.4%), but inflation close to +7% and the tightening of monetary and budgetary policies are not a good sign. The euro zone appears to be lagging far behind in its recovery. Its economy remains sluggish despite an appreciable 2021 level (+6.7% for France, but only +2.7% for Germany): the effects of Covid-19 variants are all the more damaging to the economy with governments rapidly implementing total or partial lockdown measures to protect their citizens. The British economy, which was most affected in 2020 by the health crisis (-9.4%), also recovered well (+6.9%), but without returning to its pre-crisis level, in particular due to the effects of Brexit. As in 2020, the effects of the resurgence of the health crisis depended on multiple factors. While monetary policies were highly favorable to growth overall, a new risk developed due to price increases, starting with those relating to the energy sector, then industrial and agricultural commodities. The potential return of inflation has prompted the main central banks to consider normalizing their monetary policies from the fourth quarter of 2021 by ending quantitative easing (QE) and, in some cases, increasing interest rates.
In the United States, GDP in 2021 enjoyed a particularly early and marked recovery. According to the latest estimates from the Factset consensus, activity grew by +5.6% after a decline of -3.4% in 2020. The pre-crisis GDP was met and surpassed at the beginning of the second-half of 2021, illustrating the dynamism of the economy and the success of the government support measures renewed in 2021 by the Biden administration. Growth would probably have been stronger if the Covid-19 variants had not disrupted the economy during the second half of the year, particularly during the fourth quarter. Indeed, some indicators, especially employment and productivity, continue to show signs of the 2020 crisis. Total non-agricultural private sector employment in the U.S., which peaked at 152.5 million before the health crisis, plummeted to 130.2 million in 2020 before climbing back to 148.9 million at the end of 2021: despite the creation of 18.7 million new jobs, the shortfall still stands at 3.3 million jobs. Labor productivity, measured in terms of output per employee, fell 30% during the fourth quarter. However, U.S. unemployment fell sharply to 3.9% after peaking at 14.7% in April 2020. The new phenomenon that marked the 2021 economic climate in the U.S. was the emergence of inflation. Goods and services prices rose just under 7% in 2021, the biggest year-on-year increase since 1982. Capital goods prices soared, particularly in the real estate sector, where home prices rose around 20% in 2021. Originally stemming from supply issues (shortage of electronic components and industrial inputs in general), price rises were accentuated by the Federal Reserve’s monetary policy. TheFed continued to pump huge amounts of money into the economy through its QE (Quantitative Easing) program, at a rate of dollar 120 billion per month for almost all of 2021, which kept interest rates at record low levels and prompted a surge on Wall Street by creating a “wealth effect”.
In the euro zone, GDP recovery, albeit vigorous as well, failed to fully offset the 2020 slump: France +6.7% versus -8%, Germany +2.7% versus -4.9%, Italy +6.3% versus -9%, Spain +4.5% versus -10.8%, etc. Germany, the region’s strongest economy, posted the worst performance in terms of GDP. Government support measures were gradually withdrawn as economies reopened, and the European Central Bank continued to stimulate activity through a highly expansionary monetary policy (creation of over euro 100 billion per month through asset purchases on financial markets). The impact of Covid-19 variants (Delta and Omicron) was stronger than in the U.S. Governments introduced partial lockdown measures that slowed the recovery in the fourth quarter of 2021. The year was marked by rising prices, as in the U.S. Although inflation was less pronounced than in America, it peaked at +5% in the eurozone, a level not seen since the 1980s. In particular, energy prices exceeding pre-crisis levels affected household purchasing power and growth throughout the region.
