Would growth generate resistance? The French economy could continue to grow, albeit very slightly, in the fourth quarter, according to the Banque de France, with businesses appearing relatively confident despite geopolitical uncertainties and rising energy prices.
The French economy could thus see a “very slight increase” in its GDP in the fourth quarter and not a stagnation as initially expected, the Banque de France said on Wednesday in its monthly economic survey. This forecast, not quantified, is “surrounded by a very strong uncertainty in particular due to the international context”, declared Olivier Garnier, general director of Statistics, Studies and International, during a presentation.
“At this stage … we are leaning more towards a small risk upside compared to our initial forecast of zero growth in the fourth quarter,” he added. At the end of October, the INSEE had announced for its part that it had zero growth in the fourth quarter, after a weak increase in GDP (+0.2%) during the summer, which several economists presented as the definitive leap in the economy. .French economy.
However, the forecast of the National Institute of Statistics for all of 2022 (+2.6%) coincides with that of the Banque de France. The government expects annual growth of 2.7% and highlights the small difference between these different forecasts, given the uncertainties.
The three r”
Although the Banque de France does not explicitly mention the war in Ukraine, it nevertheless points out that the international context and, in particular, the geopolitical situation pose many uncertainties about growth, as does the impact of the weather on energy supply. In the long term, it anticipates an economic cycle that can be summed up in three “Rs”: resilience, slowdown and recovery in 2024.
The monthly business survey conducted among companies shows that the latter remain relatively confident and that the resilience phase is prolonged. In detail, activity in market services and industry increased in October and stagnated in construction. Companies expect a similar trend in November.
Based on data from other sectors, the Banque de France estimates that October’s GDP will be slightly lower than September’s, in particular due to a drop in energy, trade and transport, but anticipates a recovery in November. The institution’s survey, which interviewed some 8,500 companies between the end of October and the beginning of November, points to two points of improvement, supply difficulties and the pace of price increases, which remain at high levels but do not increase. Companies’ order books remain “well-stocked”, but hiring difficulties, if “no longer increasing”, also remain significant.
energy anxiety
The Banque de France warns of treasury difficulties, in particular for industrial companies, “with a deterioration that is confirmed”. Olivier Garnier clarified, however, saying that he did not see any particular difficulties in repaying state-guaranteed loans granted to companies to deal with the consequences of the health crisis. The institution has also started asking companies about the impact of rising energy prices on their businesses and their margins.
If in October it was limited, with a quarter of the companies observing an impact on their activity (and only 7% a strong impact), the concern is greater for the next three months. More than a third of companies in the three sectors combined (industry, services and construction) say they are worried about their activity during the next quarter and this proportion rises to more than 60% in industry and construction in terms of their margins. The concern varies depending on the amount of energy needed for the production process, specifies the Banque de France, and the period “remains difficult” for companies.
Source: BFM TV
