Growth forecasts for the second half of the year revised downwards by INSEE

In its latest economic report, the National Institute of Statistics expects growth of 0,2% in the third quarter, then stagnation (+0,0%) for the last three months of the year, against +0,3 .XNUMX% forecast for each of these periods during the review carried out in June.

However, thanks to a much better second quarter than previously estimated (0,5% growth), reflected by the financial results of companies, INSEE's growth forecast for the whole of 2022 has been revised upwards. , at +2,6%, versus +2,3% previously.

The institute has also revised down its inflation forecast to 5,3% for 2022, against +5,5% at its last point in June, taking into account the strengthening of the discount at the pump for fuels. decided during the summer, which eases the pressure on energy prices.

"Catch-up effects, particularly in tourism, supported growth in the second quarter," explained Julien Pouget, head of the institute's economic affairs department, during a press briefing.

Service activities should continue to support growth in the third quarter, but "the catch-up effects would diminish" as it progresses towards the end of the year, forecasts INSEE.

At the same time, household consumption should continue to rebound in services in the third quarter, supported by accommodation and catering.

The first figures available indicate that in July, household consumption fell back by 0,8% after two months of slight rebound, mainly due to a further decline in consumption of manufactured goods.

High uncertainty

Over the whole of 2022, INSEE estimates that individual purchasing power would fall by around 0,5% (according to the indicator per consumption unit). It had contracted markedly in the first half of the year but should be supported by public actions at the end of the year (revaluation of the minimum wage, the index point for the civil service, various social benefits, the reduction in tax and social security last trimester).

And manufacturing output is expected to contract in the third quarter, under the effect of severe constraints on supply and high inventories of finished products.

For the end of the year, there are many uncertainties. "Some companies are starting to have occasional production problems," observes Mr. Pouget.

Companies have already announced business interruptions linked to the rise in energy prices, such as the famous Duralex glassworks, which will put its furnace on standby for at least four months from November and place all of its employees on partial unemployment.

The end of the year will also be marked by the monetary tightening pursued by the central banks, particularly in the United States. A sharp rise in interest rates could weigh on growth, reminds INSEE.

The European Central Bank meets on Thursday and could accelerate monetary policy tightening as prices rose 9,1% year on year in the euro zone in August, a record since the creation of the single currency and far more than the 2% ultimately targeted by the ECB.

Asked about the consequences of the drought of recent months, Julien Pouget indicated that INSEE was currently reporting "contrasting effects" on agriculture with, according to initial indications, a drop in cereal production and concerns about fodder for livestock and, conversely, good harvests for certain fruits.

He recalled that the weight of agriculture in the French GDP is limited, at 1,6%.

The drought also had consequences for energy production and the navigability of the Rhine, a major artery of European trade, notes INSEE.