Towards growth of 0,1% of GDP in the 2nd quarter, before uncertainty according to the Banque de France

The Banque de France anticipates growth of 0,1% in France's gross domestic product (GDP) in the 2nd quarter, it indicated on Wednesday July 10 in a survey which points to an "uncertainty" unprecedented since 2022 among chefs business, due to the political context.

After increasing by 0,2% in the 1st quarter, activity should grow by 0,1% between April and June, in particular thanks to a "moderate rebound" in activity in June, writes the central bank in its latest monthly survey economic situation.

INSEE, whose figures are authoritative, is due to publish its first estimate of growth in the 2nd quarter at the end of July. At this stage, the institute anticipates an increase of 0,3% in GDP over this period.

Until now, the Banque de France was counting on quarterly growth of between 0 and 0,1% and annual growth of 0,8% in GDP – the latter figure not being called into question.

Carried out among around 8.500 entrepreneurs between June 26 and July 3, the study highlights the uncertainty of business leaders in the face of the political context, marked by the early legislative elections of June 30 and July 7.

The latter saw the New Popular Front (NFP, left) emerge at the head of the second round and the National Rally (far right) significantly increase its contingent of deputies, without any clear majority emerging in the new National Assembly.

The Banque de France's uncertainty indicator, based on the recurrence of certain keywords in entrepreneurs' responses, "reaches its highest levels since 2022, or even since 2021 in the case of services", underlines the institution .

“It is progressing in all sectors, and particularly in services (notably temporary work, accommodation and catering, transport, advertising) where it was initially the lowest,” she explains.

"Many business leaders (...) mention a wait-and-see attitude on the part of customers, a postponement of investments, including from abroad, as well as a freeze on recruitment due to lack of visibility on possible developments in wage costs", the NFP wishes to significantly increase the minimum wage to bring it to 1.600 euros.

The uncertainty indicator nevertheless remains below the level reached in 2020 during the first two confinements linked to the Covid-19 pandemic.

This sharp rise in uncertainty is, however, little reflected in the activity of the 2nd quarter, explains the chief economist of the Banque de France, Olivier Garnier. It could materialize more in the 3rd quarter, even if the Olympic and Paralympic Games should conversely support activity.