Is the French economy one of the eurozone’s top performers in 2024? As in 2023, French growth is expected to reach 1.1% this year, compared with 0.8% for the 20 countries that have adopted the single currency, according to the latest forecasts of the Banque de France published on Tuesday 17 September. Above all, this level of growth would be significantly higher than that forecast by the institution in June, which was expecting 0.8%.
Banque de France experts explain this renewed optimism by growth in the third quarter, which should be higher thanks to a “positive impact from the Olympic Games”. But growth in 2024 is expected to be driven mainly by foreign trade, while “domestic private demand remains rather weak”, still hampered by consumer caution after several years of inflation, said Olivier Garnier, director general of statistics at the Banque de France.
The government had been expecting GDP growth of 1% for 2024, but the outgoing Minister of the Economy, Bruno Le Maire, indicated at the end of July that the growth of the French economy would “probably” be higher than the forecast.
Inflation below 2% in 2025
In 2025, GDP is expected to grow by 1.2%, but this time it will be the resumption of business investment and a rebound in household consumption that will contribute most to growth. In a context of slowing inflation, wages will remain more dynamic than prices, which will reinforce the increase in household purchasing power. The Banque de France estimates that the average per capita wage will increase by just over 3% on average in 2025, while inflation will have fallen below 2%.
In fact, the institution expects inflation, calculated using the harmonised price index to facilitate European comparisons, to fall from 5.7% in 2023 to 2.5% in 2024 and then to 1.5% in 2025. This sharp drop between this year and next is due in particular to the announced 15% drop in electricity prices.
The Banque de France has set its forecasts for 2026, for which it expects growth of 1.5%. It also estimates that the unemployment rate will rise from 7.5% in 2024 to 7.6% in 2025 before falling to 7.3% in 2026.
The truth is that its projections are surrounded by “significant uncertainties”, he admits, referring to “the current political uncertainty in France”, which “endangers the forecasts for public finances and the more or less expectant behaviour of companies and households”. Without forgetting “geopolitical risks (war in Ukraine, situation in the Middle East, trade tensions, etc.) and their effects on raw material prices and international trade”.
Source: BFM TV
