The next government will have to preserve income and avoid resumption of unemployment in a context of pricing and slowdown in growth. While continuing the efforts to bring back the factories.
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Faced with a more fractured company than ever, Emmanuel Macron will have to lead major economic sites during his second term. In a context of increase in inflation, while the war in Ukraine weakens the world supply chains a little more, it will have to preserve the purchasing power of the French and avoid a resumption of unemployment, while mastering the public finances and by continuing the efforts undertaken in favor of the country’s reindustrialisation. With, in sight, the imperative to organize the energy transition and to meet the climate challenge.
The spectrum of stagflation
Less growth, stronger and more sustainable inflation and prospects tainted with very strong uncertainty. It is the bitter cocktail promised by the International Monetary Fund (IMF) for the world economy.
For his second mandate, Emmanuel Macron should therefore not count on the strong economic recovery observed in 2021, which resulted in a 7 % increase in gross domestic product (GDP). French growth should hardly exceed 2.8 % in 2022, and again thanks to the vitality of the beginning of the year, when Russia had not yet attacked Ukraine and caused a buzz on energy and energy costs and certain raw materials.
Inflation, which reached 7.4 % in the euro zone in March, is currently contained at 4.5 % in France thanks to the measures taken by the executive. But it could reach 5 % in the medium term. “We are moving more and more towards a lasting conflict in Ukraine, argues Bruno de Moura Fernandes, responsible for macroeconomic research at Cace. Mechanically, inflationary tensions will remain high in the coming quarters.”
The European Central Bank (ECB) would then have no choice but to raise the guiding rates, a decision that it has not yet taken. “If I increase interest rates today, this will not lower the price of energy”, because “50 % of inflation is linked to energy prices,” said the president of The Monetary Institute, Christine Lagarde, Sunday April 24, in an interview with the American channel CBS .
The question is how long the ECB will be able to hold this position, while other monetary institutes worldwide have started to raise their rates. The stagflationist scenario, according to Mr. de Moura Fernandes, “seems inevitable, especially if harder sanctions are taken against Russia, in particular an embargo on Russian gas”.
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