The Banque de France presented its macroeconomic projections for 2024 this weekend.
Without a shadow of a doubt, the invasion of Ukraine by Russia will have serious economic repercussions in France. And, whatever the evolution of the conflict,there will be less growth and more inflation “in the next three years, warned Sunday Olivier Garnier, director general in charge of studies and international relations of the Banque de France.
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The institution presented this weekend its macroeconomic projections for 2024, based on two different scenarios given the uncertainty. The first, called “conventional”, which assumes a price of a barrel of brent at 93 dollars on average over the year and a price of megawatt-hour of gas of 102 euros, expects an annual average GDP growth of 3, 4% in 2022. The second, called “degraded”, with an average price of a barrel of Brent at 119 dollars and a gas price at 181 euros, shows growth of 2.8% over the year.
Two possible scenarios
At the end of 2021, the Banque de France expected the country’s economic activity to grow by 3.6% in 2022. And it could have been even stronger than expected without the conflict in Ukraine. “With the growth momentum observed at the end of 2021 and the beginning of 2022, we would have been closer to 4% than to 3.6% “, believes Olivier Garnier. If the institution did not want to give preference to one of the two scenarios, the energy prices recorded in recent weeks argue rather in favor of the second.
Beyond growth, inflation will rise in 2022. In the best case, it should be around 3.7% on average over the year and, in the worst, 4.4%. The two projections take into account an extension until the end of 2022 of the “tariff shield” for gas, but no additional action on the part of the public authorities. However, the government has already announced that it will soon deploy “a resilience plan to help businesses and households. What relieve the finances of the French, but not those of the State…