French economic activity is expected to fall by 0.2% in the fourth quarter of 2022, according to the French public statistics institute, but insisting that it will not lead to a recession.
In a report published on Thursday, the French National Institute of Statistics and Economic Studies (INSEE) explained that French growth slowed in the third quarter of 2022 (0.2%), notably due to market tensions caused by “high prices for many raw materials and fears over energy supplies.”
“Business investment […] was the only significant contributor to domestic demand growth,” thanks in particular to a greater number of vehicle purchases. On the contrary, imports of goods and high spending by French tourists abroad fuelled the slowdown observed by INSEE.
Additionally, industrial production is undergoing “significant constraints,” mainly due to the rise in energy prices. Strikes in refineries have, “in a more punctual way” and with the problems noted in the French nuclear park, weighed on the economic activity of refiners.
For the fourth quarter of 2022, INSEE expects a slight decline of 0.2% due, in particular, to the slowdown in the industry, refineries, “the branches exposed to the rise in energy prices,” and “accommodation and catering, which is in sharp contraction.”
On the household side, consumption is expected to fall by 0.7%, mainly due to a “very low energy consumption.”
There are two reasons for this: efforts to be more frugal and higher than average temperatures last October.
But this will not put France in the path of a recession, with INSEE expecting a slight rebound in 2023 (0.1% in Q1 and 0.3% in Q2). Nevertheless, over the whole of 2022, French GDP should grow by 2.5%, a figure 0.2 points lower than the government’s forecasts.
Finally, the Institute forecasts inflation at 6.6% for the last quarter of the year, before peaking at 7% at the beginning of 2023. The purchasing power of households is affected by the inflation of consumer goods, whose prices have increased by 11.7% over one year (in November).
However, it is recovering after two-quarters of decline (Q1 and Q2 2022), with a positive evolution (+0.8% and +0.7%) of “purchasing power per consumption unit.”
(Davide Basso | EURACTIV.fr)
Source: euractiv.com
