PARIS (Agefi-Dow Jones) – The Banque de France announced Sunday evening to raise its growth forecast for 2021 to 6.7%, as previously indicated by its governor, François Villeroy de Galhau, after a “strong economic rebound in the third trimester”. However, the institution slightly lowered its estimate for 2022 as it anticipates a slowdown at the end of this year and early 2022.
Due to the tensions on supplies and the resurgence of the Covid-19 pandemic in France, the economic recovery is expected to be more moderate in the fourth quarter of 2021 and the first quarter of 2022 than during the period from July to October, said the Banque de France. It is banking on gross domestic product (GDP) growth of 0.6% over the last three months of 2021 and 0.2% in the first quarter of next year, compared to 3% in the third quarter.
The Banque de France’s previous macroeconomic projections, published in September, forecast economic growth of 6.3% in 2021. For 2022, the central bank now expects growth of 3.6%, against 3.7% previously expected. .
The economy should be doing better in 2023 than previously indicated, the Banque de France having raised its growth forecast for that year from 1.9% to 2.2%. “The rebound, partly delayed in time in the current context, would still continue on this horizon,” she said.
“In 2024, the activity would return to a more usual growth and in line with its long-term trend”, at 1.4%, specified the institution. “The level of activity reached at the end of the forecast horizon would be quite close to the trajectory that we predicted in our pre-crisis forecast. We indeed estimate that the final loss of gross domestic product (GDP) due to the health crisis would be very limited, thanks in particular to the dynamism of the labor market “, she underlined, adding that her projection takes into account the effects of the recovery plan.
Inflation should drop back below 2% before the end of 2022
Inflation, for its part, is expected to peak at around 3.5% in December before gradually falling below the 2% mark by the end of 2022, estimates the Banque de France. In 2023 and 2024, the increase in consumer prices should stand at 1.5% and 1.6% respectively, anticipates the institution, stressing, however, that the uncertainty surrounding the evolution of prices remains high.
“In the short term, the inflation spike could be prolonged if the pressures currently observed on the prices of inputs in production last longer than expected or if energy prices rise again. In the medium term, the trajectory of inflation will depend on the transmission of price increases to wages, and vice versa, “she warned.
-Valérie Venck, Agefi-Dow Jones; +33 (0) 1 41 27 48 25;
[email protected] ed: ECH
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December 20, 2021 00:43 ET (05:43 GMT)