INSEE will lift the veil on modest expected growth in the second quarter in France

Between April and June, gross domestic product (GDP) would increase by 0,1%, according to a forecast from INSEE, which will say on Friday whether this anticipation is confirmed or not, after a first quarter where GDP had increased by 0,2, XNUMX%.

Decline in household consumption, maintenance of their savings at high levels, slowdown in corporate investment, drying up of access to credit with the sharp rise in interest rates: the spring may have been foggy for activity economic.

“Almost all the indicators point to a very marked weakening of growth,” notes Maxime Darmet, economist at Allianz Trade, interviewed by AFP.

The traditional engine of the economy, household spending continued to suffer from high inflation. This began to decline during the quarter, passing its peak and reaching 4,5% over one year in June thanks to the decline in energy, but food prices continued to soar, with an increase of almost 14%.

In an attempt to curb these price rises and return to 2025% inflation by 2, the European Central Bank (ECB) has been carrying out monetary tightening on an unprecedented scale for the past year, resulting in a marked increase in key rates.

While credit had so far supported household consumption, their investments and those of businesses, this tightening of financial conditions is also beginning to weigh on demand.

Doing well, services would have shown resilience in the second quarter, as would industrial production, which is still benefiting from the normalization of supply chains after major disruptions during the pandemic.

"Cycle reversal"

Among the elements of resilience, Stéphane Colliac, economist at BNP Paribas, lists the good performance of the automotive and aeronautical sectors, tourism and transport, which experienced a resurgence in the second quarter after the strikes linked to the pension reform. .

"But the slightest demand has an impact on growth since it constrains production" and order books are now "weaker", underlines the economist with AFP.

His colleague Maxime Darmet notes an increase in stocks, which he considers "bad omen". It reflects a surplus of supply and "it is generally a sign of a downturn in the cycle".

INSEE will publish two other indicators on Friday which will also make it possible to take the pulse of the country's economic situation: a provisional estimate of inflation in July and household consumption in June.

This mixed picture for the second quarter announces a sharp slowdown for the whole of 2023, with a forecast increase of 0,6% in GDP, according to INSEE, far from the 2,5% of 2022.

The government is more optimistic so far, banking on 1% growth, but it could revise its forecasts when the 2024 budget is presented in September.

The will of the executive to restore public finances undermined by the crises by deploying a more restrictive budgetary policy - in particular the reduction of the tariff shield - should weigh. Thus, regulated electricity tariffs will increase by 10% on 1 August.

These negative effects would however be offset by more or less the maintenance of employment and the acceleration of wage growth, which catches up with inflation with a lag. With the key, a small rebound in household consumption.