Optimism remains de rigueur at the Banque de France. This Tuesday, the institution’s economists once again revised their French GDP growth forecasts upwards and expect +0.2% in the first quarter of 2023, that is, 0.1 point more than in the latest estimates of January.
“GDP growth should be supported in the quarter by the dynamism of activity in industry and market services during the first two months of the year”, having been January (+0.2%) as February (+0, 1%) better than expected, underlines the Banque de France in its latest monthly business survey.
Impact of social movements
The month of March, on the other hand, was marked by a drop in GDP of 0.3%. Despite an increase in activity in the manufacturing industry, the industrial sector as a whole experienced a drop in value added of more than 1%.
The decline in activity was observed above all in the energy, water, waste, coking and refining, electricity production and waste management branches (-6.9%) affected by the social movements against the pension reform. The same occurs in market services (-0.3%), where activity increased in domestic and commercial services, but fell in transport and commerce (-1.4%), also affected by social movements.
“For the same reason, activity would have remained stable in the restaurant sector, while business leaders anticipated an increase in activity last month,” notes the Banque de France. In the end, only the construction sector saw its activity grow last month (+0.3%).
Rebound expected in April
The decline in activity observed in March cannot be attributed solely to social movements. For the Banque de France, it is difficult to distinguish what is really a strike and what is a grassroots effect, a sort of “backlash” after better-than-expected months of January and February.
Be that as it may, the institution expects a rebound from April while “business expectations (…) currently suggest an increase in GDP compared to March, with a once again contrasting situation depending on the sector (fall in construction, increase in services and strong rebound in industry), despite the fact that “there is still a high level of uncertainty surrounding these prospects”.
In early March, Banque de France had doubled its growth forecast for all of 2023. It now expects a 0.6% GDP increase, up from 0.3% a year forecast in its previous projections published in December.
Source: BFM TV
