PARIS (Reuters) – The French economy should stall as expected at the end of the year in an international and economic context that is still uncertain due to the war in Ukraine, INSEE estimated in its economic report on Thursday.
The National Institute of Statistics confirms forecasting growth of 0.2% for the third quarter and stagnation in gross domestic product (GDP) for the period October-December, an intermediate scenario between a possible favorable effect of “the relative resilience ” of the business climate and a possible decline in activity.
“While the scenario of modest growth in the third quarter becomes clearer (…), that relating to the last quarter remains particularly uncertain at this stage given the multiple hazards likely to affect it (…): geopolitical developments, food supplies energy, health situation, consequences of monetary tightening, etc”, underlines the institute.
Insee anticipates in the fourth quarter a slowdown in activity in services and a decline in the manufacturing sector.
Growth would be 2.6% on average annually in 2022, an estimate unchanged from September, which is slightly lower than the assumption of a rate of 2.7% on which the government has built its draft budget .
Inflation in October should remain close to September’s level, at 5.6% year-on-year according to the first estimate, before rising again in November and then December, reaching +6.4% at the end of the year.
This upward movement would primarily reflect the rise in energy costs with the reduction in the rebate at the pump, which will drop to 10 euro cents per liter from November against 30 euro cents currently, but also an effect unfavorable basis.
In food and manufactured products, price inflation should continue to increase “under the effect of past increases in the prices of raw materials and inputs”.
In the second half of the year, the purchasing power of households should however recover significantly, estimates INSEE, due, above all, to the support measures voted this summer or announced since, such as the revaluation of the index point in the civil service. and social benefits.
Household gross disposable income should thus increase by 4.7% in 2022.
(Written by Laetitia Volga, Editing by Kate Entringer)