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French economic activity less dynamic than hoped in 2023

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Image of Paris at sunrise with the Eiffel Tower Copyright Canva/RudyBalasko
Copyright Canva/RudyBalasko
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Despite a disappointing 2023, the Bank of France predicts the French economy will accelerate up to the year 2026.


France's central bank has slightly lowered its growth forecast for the country's economy to 0.8% for 2023, but expects a subsequent gradual acceleration up to 2026 as inflation continues to fall.

Tuesday's downward revision by the Bank of France, which had until now been anticipating 0.9% growth in gross domestic product (GDP), takes account of a third quarter in the red (-0.1%), dragged down by sluggish investment and household consumption.

Growth should then gradually accelerate to 0.9% in 2024, then 1.3% in 2025 and 1.6% in 2026, according to the bank.

"We have confirmation of our disinflation scenario with a gradual recovery in growth," said Olivier Garnier, director general of statistics, research and international affairs at the Bank of France, when presenting the new projections to the press.

Inflation is expected to reach an annual average of 5.7% in 2023 and 2.5% in 2024, measured according to the Harmonised Indices of Consumer Prices (HICP), which enables comparisons to be made between European countries.

It will then continue to fall, dropping below the European Central Bank's (ECB) inflation target of 2% at the start of 2025: 1.8% that year and 1.7% in 2026.

The disinflation, which is largely the result of the high interest rates set by the ECB to cool prices, will take place "without a recession", said Garnier.   

The easing of prices, combined with the rise in real wages, will give households some breathing space, as their purchasing power will increase and they should consume more (1.5% in 2024 after 0.7% in 2023), which should further support growth from next year.

From 2025 onwards, the negative effect of high interest rates should begin to fade, according to the Bank of France, allowing investment to pick up again after a dip (-0.4%) expected in 2024.

"In 2026, these trends should strengthen to generate a dynamic recovery," the bank said.

The unemployment rate, which is expected to rise from 7.3% in 2023 to 7.8% in 2025, adjusting with a time lag to the economic slowdown, should start to fall again in 2026 (to 7.6%).

More optimistic than the central bank, the government is still forecasting 1% growth in 2023 and 1.4% in 2024.

In 2022, GDP grew by 2.5%.

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