INSEE will reveal the first elements on 2024 growth on Tuesday

Every tenth of a percentage point will count towards reaching the target of 1% annual GDP growth set by the executive, a forecast higher than that of the main economic institutes.

While the government has placed growth (and spending control) at the heart of its public finance recovery strategy, a zero or low figure in the first quarter would considerably complicate the equation.

If the National Institute of Statistics and Economic Studies (Insee) announces "0% or 0,1% in the first quarter - whichever of the four weighs the most in the calculation of annual growth - it will be very difficult" reach 1% over the year, explains Stéphane Colliac, economist at BNP Paribas, to AFP.

And “when you start lower, then you have to pedal quite quickly to catch up,” he adds.

In its latest economic report published in mid-March, INSEE revised its forecasts downward for the first quarter, now estimating that growth should be zero.

More optimistic, the Banque de France and Société Générale are counting on GDP growth of 0,2% between January and March.

Between the two are the economists of BNP Paribas (+0,1%) and those of the French Observatory of Economic Conditions, who are betting on "a small 0,1% or a large 0%", indicates to AFP OFCE economist Magali Dauvin.

Macroeconomic data from the start of the year hardly encourages optimism.

“We did not have very dynamic household consumption, even though it is an important component of GDP,” explains Ms. Dauvin, adding that construction “hammered” growth, like part of industry.

When is the relaunch?

With this mixed first quarter, "we think that (the government's forecast) is not at all realistic," says the OFCE economist, who is instead counting on 0,5% annual growth.

Stéphane Colliac bets on 0,7%, after a “delay in ignition” in the first quarter.

However, achieving 1% annual growth “is not impossible either”. “We have had upward surprises in the past: in 2023, we had a spectacular second quarter,” recalled the economist, “but that does not necessarily happen every year…”

The context is delicate for the government, with the deficit slipping in 2023, to 5,5% of GDP compared to 4,9% expected.

It is clear that the rating agencies Moody's and Fitch, even if they maintain for the moment their high ratings on France's capacity to repay its debt, do not believe in a return of the deficit below 3% in 2027, which is a European requirement.

“The only thing that matters to me is that we return below the 3% public deficit in 2027,” reiterated Bruno Le Maire on Sunday evening on LCI, describing the fact that revenues were lower last year by 20 billion euros than the government's expectations.

The executive has already made 10 billion euros in savings in state spending and is seeking 10 billion additional cuts to be made in 2024, to achieve its new public deficit objective (5,1% of GDP, compared to 4,4% initially hoped for).

However, the first ten billion savings should already reduce annual growth by 0,2 points, the OFCE warned at the beginning of April.

“If we want to get remotely close to the government's figure (1% growth in 2024, Editor's note), we really need a boost in domestic demand, which would come through household consumption,” says Magali Dauvin.

It is possible, according to Mr. Colliac, for whom the disappearance in the second quarter of “persistent pockets of inflation” in energy and services can restart the machine. He also mentions a potential recovery in business investment, so that this would provide “two solid supports” for the French economy in 2024.

With the government, "we have a small disagreement on the moment when the recovery occurs", which has repercussions on the annual average, estimates Mr. Colliac, "but overall, the story is quite similar": the recovery will take place well in 2024.