Seen from Bercy, so far, so good. Despite a negative first quarter, where the gross domestic product (GDP) posted a decline of 0.2 points, France will experience positive growth this year, assures the Minister of the Economy, Bruno Le Maire, confident in the “capacity of resistance” of the French economy. Admittedly, the government plans to revise its growth forecast, currently set at 4%, at the end of June, but it is resolutely ruling out the risk of recession.
Was he overly optimistic? Against a background of accelerating inflation, which reached 5.2% in France in May, economists are much more reserved than the executive on what awaits the French economy in the months to come. “The probability of being in recession is far from zero”, assures Philippe Waechter, chief economist at Ostrum Asset Management. Blame it on the war in Ukraine, on the rise in energy and raw material prices, but not only.
“We had an environment driven for twenty years by the Chinese economy: this is no longer the case. Today, we don’t see what could drive demand up,” emphasizes Mr. Waechter. The World Bank took note of this phenomenon by lowering, on Tuesday, June 7, its global growth forecast to 2.9%, while it was still counting in January on growth of 4.1%.
The French Observatory of Economic Conditions (OFCE) has also calculated the impact of the multiple planetary shocks that are accumulating: rising energy prices, supply difficulties, geopolitical uncertainties, not to mention the future hardening of the Monetary Policy. For this economic analysis body, these shocks would reduce French growth, which would be only 2.7% in 2022, against the 4.2% forecast at the start of the year. The OCFE estimates that the economic policy measures will make it possible to offset the effects of the crisis by up to 0.8% of GDP. But he does not anticipate a recession as such.
Room for improvement
In Q2, activity should progress slightly, by around 0.2%, and then by 0.3% in each of the following two quarters. Paradoxically, while inflation is eroding purchasing power, now at the heart of the government’s concerns and the focus of future economic measures, it is consumption, which represents more than half of French GDP, which would save the activity. “In the first quarter, household consumption fell by 1.5%, the worst figure since 1950, which shows that households very quickly adjusted the level of their consumption to the drop in their purchasing power, argues Mathieu Plane, deputy director of the analysis and forecasting department of the OFCE. Insofar as, on the one hand, geopolitical uncertainties subsided in April and, on the other hand, the level of savings remains very high, we do not expect a further drop in consumption in the second trimester. »
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