PARIS (Agefi-Dow Jones)–The Banque de France on Thursday sharply lowered its growth forecasts for France in 2022 and 2023, due to the acceleration of inflation, which should reach 5.6% on average this year before receding.
The institution estimated that the conflict in Ukraine should subtract a total of around two points of gross domestic product (GDP) from France over the period from 2022 to 2024.
For the current year, the Banque de France now anticipates an increase in France’s GDP of 2.3%, against 3.4%, in its previous forecasts published in March.
Growth will be “affected by the current level of inflation which weighs on purchasing power, and by the deterioration of the international economic situation as well as by the very uncertain geopolitical context which is degrading the confidence of all economic agents”, explains the Bank of France.
According to its projections, inflation, measured by the harmonized consumer price index (HICP), will stand at an annual average of 5.6% for the whole of 2022. In March, the Banque de France was still counting on inflation limited to 3.7% this year.
By way of comparison, last May the HICP was up 5.8% over one year, according to INSEE. This figure would not constitute a peak, as the Banque de France expects inflation to exceed 6% in the coming months.
The “tariff shield” put in place by the government on gas and energy prices should make it possible to curb the rise in prices by almost two percentage points. The Banque de France has calculated that inflation would amount to 7.5% on average over 2022, excluding this measure. The institution’s projections assume that this shield will not be extended beyond the end of 2022.
Inflation below 2% in 2024
For the year 2023, the Banque de France now anticipates growth of 1.2%, against 2% in March, and inflation at 3.4%, against 1.9% previously.
The forecasts for 2024 have only been slightly modified by the institution. Growth is thus expected at 1.7% and inflation at 1.9%, against respectively 1.4% and 1.7% previously. “In 2024, once the shocks to energy and food prices, which are the source of imported inflation, have passed, activity would return to a more lively pace”, judges the Banque de France.
The institution also predicts a slight rise in the unemployment rate. After 7.4% in 2022, this rate would rise to an annual average of 7.7% in 2023 then to 7.9% in 2024.
In addition to all of these forecasts, the Banque de France has established an “unfavorable” scenario, the probability of which it considers to be lower and which is built on “a series of shocks”, such as additional pressure on oil prices. energy. In this scenario, France’s GDP would grow by 1.5% in 2022 before falling by 1.3% in 2023 and then returning to growth, with an increase of 1.3% in 2024. Inflation, it , would stand at 6.1% in 2022 then 7% in 2023 before declining to +0.7% in 2024.
-Julien Marion, Agefi-Dow Jones; +33 (0)1 41 27 47 94; [email protected] ed: ECH
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June 21, 2022 12:01 ET (16:01 GMT)