In France, third quarter growth expected to be just positive

In its forecasts, INSEE said it expected an increase of 0,1% in GDP from July to September, after +0,5% over the previous three months thanks to good exports.

This solid result was “a surprise for everyone”, notes Charlotte de Montpellier, macroeconomist at ING, who this time “expects a deceleration like everyone else”.

With a deteriorating economic context, a public debt of more than 3.000 billion euros and a public deficit beyond the reach of Brussels, the Minister of the Economy Bruno Le Maire now has no other choice but to display great firmness on public finances, if it wants to avoid further downgrades of France's credit rating by the rating agencies, or financial sanctions from the European Commission.

Claiming to be "intractable on debt reduction", Mr. Le Maire nevertheless admitted that it would be necessary to "revisit the entire copy" of the forecasts "if the conflict in the Middle East spreads", while Bercy is counting on a restart of the growth at 1,4% in 2024.

"Concerned"

Household consumption - which accounts for more than half of French growth - should experience a tremor in the third quarter and keep growth in slightly positive territory over the period, according to INSEE, thanks to a slowdown in inflation which has so far been very penalizing for purchasing power.

The price increase reached 4,9% year-on-year in September, the rise in energy prices against a backdrop of geopolitical tensions being offset by a deceleration in food prices.

On the industrial side, certain sectors should still benefit from catch-up effects, such as transport and aeronautics which had previously suffered from supply problems.

At the same time, the high interest rates decided by the European Central Bank (ECB) to cool inflation are beginning to weigh on activity, penalizing investments by households (in construction in particular) and businesses, although The institution decided to take a break this month, after raising its key rate to 4%.

In addition to GDP, INSEE also publishes data on household consumption in September and provisional data on inflation in October on Tuesday.

Philippe Waechter, director of economic research at Ostrum Asset Management, said he remained “concerned” by this consumption.

He also does not see any improvement in exports, "with neighbors who are not doing well", in a context of slowing growth in world trade in goods. German GDP is expected to decline by 0,4% this year.

For the whole of 2023, INSEE anticipates growth of 0,9%, identical to the forecast of the Banque de France and a little below that of the government (+1%).