INSEE raised its growth forecast for 2023 to 0.9% on Thursday thanks to dynamic exports in the spring, but activity will mark time compared to the previous year in a context of high inflation.
The new forecast from the Institute of Statistics, which until now anticipated an increase of 0.6% in gross domestic product (GDP), is closer to the 1% increase expected by the government. It follows a second quarter which was distinguished by an unexpected rebound of 0.5% in gross domestic product (GDP) thanks to dynamic exports.
This improvement would, however, be followed by a sharp slowdown, with GDP up 0.1% in the third quarter and 0.2% in the fourth. So that the annual growth would remain thus well below that of 2.5% recorded in 2022a year that was still in the wake of the post-Covid recovery.
Inflation down
On the price front, INSEE expects inflation to come down 4.2% over one year in December, after having exceeded 6% at the start of the year. She would settle down 5% annual average (against 5.2% in 2022).
This shortness of breath would also apply to the food prices, whose rise should reach 7.2% over one year in December. In this sector, prices had recorded double-digit surges, approaching 16% year-on-year in March and pushing households to consume less.
The slowdown in prices brings a little breathing space to consumers (…) and businesses, allowing positive but modest growth to be recorded in the second half of the year, commented Julien Pouget, head of the INSEE economic department. , during a press conference. But (there is) not much resilience because inflation remains high for households and (…) interest rates also remain high, he added.
The slowdown in inflation, despite a jump in August, should give a slight boost to household consumption, the traditional driver of French growth. At the same time, exports would slow down while the sharp rise in interest rates decided by the European Central Bank (ECB) and aimed at cooling prices would penalize investments by businesses and households, particularly in construction.
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