The Banque de France (BdF) confirmed on Monday that it foresees zero growth in the French gross domestic product (GDP) in the fourth quarter of 2024, compared to the third, due to the “reaction” after the Olympic and Paralympic Games in Paris.
“The French economy is not currently in recession, although activity remains slow,” commented the BdF’s chief economist, Olivier Garnier, when presenting the monthly economic study carried out from December 20 to January 7 among some 8,500 companies.
This “leads us to confirm our estimate of GDP growth of +0.2% in the fourth quarter excluding the impact of the Olympic Games”, that is, of “stable GDP” taking into account this negative effect estimated at -0 .2%, he detailed.
Greater activity expected in January
Activity remained relatively stable in December in construction and industry, where the strength of aeronautics and agri-food contrasted with a slow automobile or textile-clothing sector. It increased in services, particularly accommodation and catering, which benefited from the end-of-year holidays and the reopening of the Notre-Dame cathedral in Paris.
In January, activity is expected to increase in all three sectors, but the dynamics observed at the end of 2024 in services are expected to lose strength. Furthermore, order books remain scarce in construction and industry, except in aeronautics, “which does not suggest a significant acceleration (of activity) in the coming months,” stressed Olivier Garnier.
Added to this are the “uncertainties” linked to the French political context, which keep the uncertainty indicator at a “high” level. Prime Minister François Bayrou is due to lift the veil on his government’s budgetary guidelines during his general policy statement on Tuesday.
“Wait and see”
In the construction sector, “the waiting attitude linked to the context of uncertainty, in particular with regard to measures in favor of housing”, such as the zero rate loan (PTZ), counteracts the positive effect of the lowering of interest rates. and the revival of real estate loans, noted Olivier Garnier. Regarding sales prices, the trend towards normalization continues in the three sectors of activity and contracting difficulties continue to decrease (30% of companies mention them), according to the monthly survey.
In December, the Banque de France lowered its 2025 growth forecast from 1.2% to 0.9% due to uncertainties in France and abroad. Its governor, François Villeroy de Galhau, then expressed concern about France’s very degraded public finances.
Source: BFM TV
