French GDP should grow by 0.6% in 2023, 1.2% in 2024: Banque de France

30 Mar '23

2 min read

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French economic activity is likely to see limited growth this year, before recovering in 2024 and 2025, Denis Beau, first deputy governor of the Banque de France, has said.
The GDP should grow by 0.6 per cent in 2023, 1.2 per cent in 2024 and 1.7 per cent in 2025.
Trade shock should subside this year as import price pressures fade, he said.

Economic activity in France is expected to grow at a limited pace this year, before recovering in 2024 and 2025, according to Denis Beau, first deputy governor of the Banque de France, who recently said French gross domestic product (GDP) should grow by 0.6 per cent in 2023, 1.2 per cent in 2024 and 1.7 per cent in 2025.

“We should therefore effectively escape the recession in France as well as in the euro area as a whole,” Beau told the Nomura 39th Central Bankers Seminar held at Kyoto yesterday.

Trade shock should subside this year as pressures on import prices fade with the easing of energy prices, and is expected to represent an additional economic cost of around 0.5 per cent of the GDP in France compared to 2021 when conditions were more normal, Beau said. It should then remain limited in 2024 and 2025, he said.

Supply-side bottlenecks in terms of supply and recruitment are easing, but they should continue to constrain the economic activity economy somewhat, he said.

The Banque de France believes that the current sharp acceleration in inflation is fundamentally due not to excess liquidity, but to the bottlenecks stemming from the faster-than-expected rebound in activity in the aftermath of the pandemic, as well as to the sharp rise in energy and food prices, which was largely exacerbated by the war in Ukraine, he said.

The COVID turmoil and the immediate impact of the war in Ukraine on financial stability have been well absorbed in Europe and in France, he said.

In 2023, the financial sector globally is facing renewed headwinds with heightened geopolitical risks, high inflation, the phasing-out of accommodative monetary policy, high debt levels in the private and public sector and a deteriorated economic outlook.

In addition financial markets are going through a new period of uncertainty and volatility, triggered by idiosyncratic events in the US and Swiss banking systems, he added.

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