The Banque de France on Tuesday lowered its forecast for French growth to 2.3% in 2022, against a range between 2.8% and 3.4% published in mid-March, and raised its inflation forecast to 5, 6%, due to the “shocks” hitting the economy.
Growth would be affected by the current level of inflation, which weighs on purchasing power, and by the deterioration in the international economic situation as well as by the very uncertain geopolitical context which is damaging the confidence of all economic agents, estimates the French central bank in its new economic projections.
The current shocks would persist next year to some extent, leading to a further slowdown in the economy, with growth of 1.2%, before activity resumes more vigorously in 2024, gross domestic product ( GDP) increasing by 1.7%, still provides the Bank of France.
But the rise in GDP this year is essentially due to the momentum provided by last year’s strong growth (7%), she specifies, while the quarters of the current year should contribute little to growth, a sign the brake on the economy, which even saw GDP fall by 0.2% in the first quarter compared to the last quarter of 2021.
On the inflation side, the Banque de France forecasts an acceleration of 5.6% on average this year in the HICP index, which serves as a basis for comparison between European countries, before slowing down to 3.3% in 2023 then 1, 9% in 2024.
Inflation will be higher, broader and (will last) longer, spreading in particular to services after having focused on energy and food, summarizes the French central bank.
In total, the war in Ukraine and its consequences would lead to a loss of 2 points of GDP between 2022 and 2024 in France, as well as a 3.5 point increase in inflation.
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The French central bank, however, predicts an unfavorable scenario, marked by a continuation of the conflict in Ukraine next year with its current intensity and a hardening of tensions on energy prices.
Under these conditions, growth would only be 1.5% this year and GDP would even decline by 1.3% in 2023, with a recession starting in 2022, even if this would not be reflected in annual GDP.
Inflation would reach 6.1% this year, then 7% in 2023, before slowing down sharply to 0.7% in 2024.