After the euphoric year 2021 of the post-Covid recovery (+6,8%), activity has stalled in France, shaken by the war in Ukraine which has fueled energy prices and inflation which is peaking to levels not seen in nearly 40 years, affecting households in their wallets.
The National Institute of Statistics (Insee) expects a 2,5% increase in gross domestic product (GDP) in 2022 – with a negative fourth quarter at -0,2%. This is a little below the forecasts of the Banque de France (2,6%) and the government (2,7%).
"It's not so bad, we are above the pre-Covid level", comments Maxime Darmet, economist at Allianz Trade, interviewed by AFP. But the support measures deployed with billions of euros by the government to contain the bills have played a strong role, he notes.
The good performance of French activity hides a contrasting picture.
While business investment surprised with its dynamism and supported employment, household consumption, the traditional engine of growth, was the poor relation, hit hard by the rapid rise in prices.
On the tail side, there are the order books of companies that have been well filled since the pandemic, and the ramp-ups to respond to it, particularly in the automotive sector, with investments facilitated by still favorable conditions.
“Even with a deteriorating economic situation, inflation which discourages additional demand”, the significant catch-up in activity has helped to maintain growth, estimates Stéphane Colliac, economist at BNP Paribas.
He also cites the replenishment of stocks to face demand or possible future adversities.
Anal Fissure
New orders, on the other hand, are doing less well, weakening the outlook. This is the face side.
After a first quarter in the red (-0,2%), marked by the Omicron wave of the coronavirus and the Russian invasion of Ukraine, then a spring improvement (+0,5% in the second quarter), clouds have began to pile up in the second half of the year, with sluggish household consumption in the third quarter (+0,2%).
Heralding a sharp slowdown in 2023, the fourth quarter promises to be even more difficult, penalized by strikes in refineries, maintenance of nuclear power plants as well as lower energy consumption due to a mild winter, against a backdrop of stubborn inflation.
Price increases jumped to 5,2% on annual average, and even 5,9% over one year in December, with double-digit surges for energy and food.
Despite public support, "this inflation should have pushed households to control their spending in the fourth quarter," said Stéphane Colliac. Those who can prefer to save.
The provisional inflation figure for January will be released on Tuesday as well. There is no doubt for economists that it will continue to accelerate, notably in the service sector, the pillar of the French economy, before calming down later in the year.
INSEE anticipates a peak of around 7% at the start of the year, fueled in particular by the rise in regulated gas and electricity prices.
In addition, activity will begin to feel the full impact of the monetary tightening decided by the European Central Bank (ECB) to curb inflation, according to Maxime Darmet. All against a backdrop of strikes linked to the pension reform.
"The elements of resilience are cracking," says the expert.
The Banque de France anticipates a slowdown with 0,3% growth in 2023, more pessimistic than the government (+1%) which is counting on it to begin the recovery of public finances.
But even if the outlook is "uncertain", nuance in a note Charlotte de Montpellier, economist at ING, "we are far from a leap into the void towards recession".
Germany, Europe's largest economy, should thus finally avoid recession.
A good omen for France? “The Cassandres are not always right,” French Economy Minister Bruno Le Maire said recently. “We confirm that France will have, after a solid year 2022, a positive growth in 2023”.