PARIS (Reuters) – The French economy is expected to record growth of 0.1% to 0.2% in the first quarter of 2024 after two quarters of stability, with activity progressing in industry and more slightly in services on the basis expectations for February, estimated Thursday the Banque de France (BdF) in its monthly economic survey (EMC).
While INSEE estimated last month that the growth of France’s gross domestic product (GDP) had been zero (+0.0%) in the fourth quarter except a similar rate over the July-September period, the anticipated rebound by the BdF over the first three months of 2024 could constitute a relief in a context of fear of a recession in Europe’s second largest economy.
“There is a slowdown in the economy, but we are going to escape the dark scenario that some feared. The fall in inflation will generate more purchasing power for households and therefore more consumption. From now on, prices are increasing more slowly than salaries, on average,” declared François Villeroy de Galhau in an interview with Ouest-France.
He adds that the Banque de France expects growth close to 0.9% over the whole of 2024.
“GDP would be driven (in the first) quarter by the manufacturing industry and market services, thanks in particular to information-communication, accommodation-catering, transport services and business services,” writes the BdF in its survey carried out among 8,500 companies.
In industry, the agri-food, automobile and aeronautics sub-sectors are expected to drive growth, while rubber, plastics and metallurgy are seen in decline.
In services, the Banque de France notes that activity continues to progress but at a slower pace, while in construction, it stabilizes in finishing work and contracts slightly in structural work.
The Banque de France, however, warns of a rise in its monthly uncertainty indicator, particularly in construction and industry, due to a lack of visibility aggravated by tensions in the Red Sea and blockages linked to farmers’ demonstrations. .
On the inflation front, the moderation of sales prices continues, underlines the BdF, which points to a slight change in the prices of raw materials and finished products.
“Business leaders’ expectations for February indicate a lower frequency of price increases: 12% of them plan to increase their prices in industry, 13% in market services and 10% in construction,” can we read in the bank’s investigation.
François Villeroy de Galhau estimates, for his part, still in Ouest France, that inflation will return to 2% in France and the euro zone by 2025, at the latest.
Preliminary data published this month by Eurostat shows inflation in the currency bloc at 2.8% year-on-year in January, after 2.9% in December.
(Written by Claude Chendjou, edited by Sophie Louet)
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