PARIS, September 7 (Reuters) – Growth in the French economy is expected to slow to the point of zero by the end of the year amid concerns over the country’s energy supplies, INSEE said in its economic update on Wednesday. .
Gross domestic product (GDP) growth in France, the euro zone’s second largest economy, is expected to decline from 0.5% in the second quarter to 0.2% in the third before falling to zero in the last three months of the month. year, provides the national institute of statistics.
These figures are lower than INSEE’s previous forecasts for the last two quarters of the year, for each of which it previously expected growth of 0.3%.
INSEE does not even rule out a contraction in activity in the last quarter “in the event of increased energy supply difficulties in Europe”, while Russia reduces its gas deliveries almost to zero in the face of Western sanctions linked to the conflict in Ukraine.
However, the institute now forecasts growth of 2.6% over the year as a whole, a higher rate than the 2.3% forecast in June before the announcement of more dynamic activity than expected in the second trimester.
Such growth would be slightly higher than the forecast of 2.5% on which the government based its budget in the last amending finance bill presented in July.
The growth overhang for 2023 would be “relatively modest”, around 0.2%.
With regard to price trends, INSEE expects a further acceleration in inflation, which would rise from 5.8% year-on-year in August to 6.6% in December.
However, this acceleration would be a little less strong than in the previous forecast in June, which forecast inflation at 6.8% in December.
The various government measures adopted during the summer, from the revaluation of various social benefits to energy price caps and rebates on the price of gasoline, should contribute to a rebound in household purchasing power. in the second half, after a contraction in the first six months of the year. (Report Leigh Thomas, French version Bertrand Boucey, edited by Jean-Stéphane Brosse)