The economists of the institution expect the growth of the activity of between 2.8% and 3.4%, coupled with inflation between 3.7% and 4.4% in 2022, according to its different Scenarios.
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The Russian invasion of Ukraine will result in increased inflation, but will not totally reason to the recovery of the post-Covid-19 activity of the French economy, according to the macroeconomic forecasts of the Banque de France, published Sunday, March 13th. Growth would even reach 3.4% in 2022, in the “conventional” scenario, the most favorable, built by the economists of the banking institution.
Inflation (here expressed at a harmonized rate, allowing European comparisons) would reach 3.7%, on average, over the year, but would be close to 4%, at least until September. In February, this “harmonized” rate was 4.1% in France, and 5.8% in euro zone. A less optimistic scenario, says “degraded”, provides for him, a growth rate of the gross domestic product of 2.8% in 2022, for a harmonized inflation rate of 4.4%.
In these two cases, “the shocks suffered by the French economy are important, even if they gradually fade up the 2024”, highlights the Banque de France, which still insists on the very strong uncertainties that weigh on the geopolitical situation. The first scenario relies on energy prices and raw materials, frozen at the end of February. The second scenario, more pessimistic, takes into account a stronger rise in the prices of these products.
A period of “slowflation”
“The impact of war will result in less growth and more inflation,” summed up Olivier Garnier, Director General of the Banque de France, during a press conference organized Sunday. For him, France does not move towards a “stagflation” – a period that combines a stagnation of activity and a strong inflation – mentioned by many economists since the beginning of the war in Ukraine, but rather towards a “Slowflation” period, where growth is certainly “weakened”, but remains positive.
The relative optimism of the Banque de France relies in particular on the dynamics of the post-Covid recovery, confirmed by the Monthly Conjuncture Survey of February. “At the beginning of the year, we were rather on a 4% gross domestic product progression trend, while the forecast was 3.6%,” says Garnier. A pace a little more sustained than expected, therefore, which makes it possible to fix 2.9% the “acquired growth” at the end of the first quarter.
The Banque de France table, then, on macroeconomic dampers that can come to limit the impact of the shock on the French economy. According to the institution, households could tap into their “Covid” savings surplus, from 175 billion euros, at the end of 2021, to offset the rising cost of living: a quarter of this savings could be spent spent. By 2024, although uncertainty tends, as a rule, to lead to an increase in the household savings rate.
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