2023-06-15 21:02:26
INSEE expects household consumption to fall, which would explain the slowdown in activity.
A sharp slowdown in growth. The French economy is expected to grow by 0.6% in 2023, down from the 2.5% rise in 2022, due in particular to prices which will remain high even if inflation recedes, announced INSEE, Thursday, June 15. This forecast is similar to that of the Banque de France but more pessimistic than that of the government (1%).
The rise in consumer prices should slow to 5% on annual average, against 5.2% in 2022, specified the National Institute of Statistics, presenting for the first time its annual forecasts. The Institute thus expects household consumption to fall by 0.2% (after +2.1% in 2022), which would explain the slowdown in activity, while this household consumption usually contributes to drive the French economy.
High inflation despite an ebb
Another weak link: household investment, in real estate in particular, just like corporate investment, is set to stall, under the effect of high interest rates following the aggressive monetary tightening carried out by the European Central Bank (ECB) to curb inflation. There is “this inflation which weighs on domestic demand, and then the first consequences of monetary tightening on the real economy”, summed up Julien Pouget, head of the business cycle department of INSEE, during a press conference. Because “Inflation (…) remains relatively high, even if it has begun to ebb”he added.
Consumer price inflation was 6% year on year in January and then began to slow in May to 5.1%. The decline should continue until December, when inflation would stand at 4.4%, thanks in particular to a sharp lull in energy prices, which had soared after the outbreak of the war. in Ukraine.
Above all, the rise in food prices should experience a sharp slowdown, without necessarily falling, thanks to the decline in the prices of agricultural raw materials and energy.
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