“France should avoid recession”, says the governor of the Banque de France

According to the Banque de France’s macroeconomic projections, published on Monday 20 March, the French economy, which grew by 2.6% in 2022, will come close to stagnation this year with growth of 0.6%, while the inflation would start to fall back in the second half of the year. However, these projections finalized at the beginning of March, “are surrounded by heightened uncertainty due to financial strains since March 10”underlines the financial institution.

Its governor, François Villeroy de Galhau, however, wants to be reassuring about the solidity of French and European banks, considering that their regulation is better than in the United States, and that Credit Suisse’s problems were specific to this bank.

More polemically, he calls on the government to gradually withdraw the tariff shield on energy, the state accounts being too in the red. finally, he is concerned about the excessive profit margins of companies in the fields of energy and agri-food.

Will France escape the dreaded recession?

The projection that we publish this Monday March 20 includes for 2023, compared to our previous forecasts, a little more growth and a little less inflation.

Growth should be 0.6% over the year, instead of 0.3%. So we should indeed escape the recession. Inflation was forecast to rise 6% over the year: it would now be more like 5.4%, mainly due to the moderation in energy prices. Despite these two pieces of good news, we must remain very mobilized on these two fronts.

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Yes, inflation remains a major concern…

I want to be clear: inflation remains too high today in France, even if it will start to fall by the end of this first half, and if its decline should continue over the second half of the year. .

Inflation, which mainly affected energy and food in 2022, is spreading to all goods and services. Is it worrying?

The rise in energy and food prices is the most visible inflation, and it is painfully felt by our fellow citizens. However, it only represents a quarter of our average consumption and therefore of the price index, and it should be temporary. Energy prices have already begun to slow down sharply. Food prices should start to decelerate by the end of the year, because wholesale agricultural prices have been falling since the end of 2022, and there is a time lag a few quarters between the evolution of these world prices and that of consumer prices.

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