The Banque de France more optimistic for French growth in the first quarter

The central bank had so far expected gross domestic product (GDP) growth of 0,1% in the first quarter from the previous three months.

Despite the impact on certain sectors of the mobilization against the pension reform, "activity has been rather resilient in this first quarter", commented Hélène Tanguy, its director of economic surveys, during a press conference.

The Banque de France had already reported in March a renewed optimism for the French economy in 2023, doubling its forecast for annual GDP growth to 0,6%.

She had highlighted inflation (in particular energy) which would be weaker than expected for the year, as well as "higher growth in global demand".

For the first quarter, the upward revision is attributed to the "dynamism of activity in industry and market services over the first two months of the year".

January and February "are months of good activity", underlined Guy Levy-Rueff, director of economic conditions and macroeconomic forecasts of the Banque de France.

This is evidenced, he noted during the press briefing, by the "clear rise" in the indices of production in services for January and industrial production for February, published by INSEE.

Impact of strikes

In March, activity increased in industry (particularly computer products, automobiles and aeronautics), market services (particularly business services) and construction (thanks to finishing works), according to the leaders of around 8.500 companies surveyed by the Banque de France between March 29 and April 5.

But overall, taking into account sectors not covered by the survey such as refining, electricity production, waste management or transport services, it should fall back in March, affected in particular by the strikes against the project government on pensions.

While inflation reached levels not seen since the 1980s, commodity prices were deemed "stable" in March, except in the food and aeronautics sectors.

The companies surveyed reported a "slowdown" in their selling prices for finished products.

Thus, 22% of business leaders said they had increased their selling prices in industry in March, against 44% a year earlier.

But the agri-food industry stands out once again with 52% of the leaders of the sector having taken such a decision, in particular to pass on the increases decided during price negotiations between suppliers and distributors.

While food has become the main driver of inflation ahead of energy, the government in April asked manufacturers and supermarkets to get back around the table to lower prices on the shelves "whenever necessary. objectively justified".

Supply difficulties eased last month in construction and industry.

But for April, uncertainty remains high.

Companies are anticipating a further increase in activity in industry and services, but a decline in construction.

In industry, order books are stabilizing, albeit with variations depending on the sector, with automotive or aeronautics doing well compared to chemicals or rubber-plastics. Building suffered from the decline in sales of new single-family homes.