Faced with “a major outdoor shock” with the war in Ukraine, the French economy “manifests a certain resilience” and, once the air hole of 2023 has passed, “will then adapt to this new deal” , explains the governor of the Banque de France François Villeroy de Galhau, in an interview with the “Journal du Dimanche”.
MO12345lemonde with AFP
After growth in the gross domestic product (GDP) of 2.6 % in 2022, the year 2023 should be marked by an air hole. The increase in GDP will strongly decelerate at 0.3 %, according to the “most likely” scenario selected for macroeconomic projections of the next three years published on Saturday December 17 by Banque de France .
Faced with “a major outdoor shock” with the war in Ukraine, the French economy “manifests a certain resilience” and, once the air hole of 2023 has passed, “will then adapt to this new deal” , argued the governor of the Banque de France François Villeroy de Galhau, in an interview with Sunday Journal .
This settlement will be followed by a rebound at 1.2 % in 2024 – less than the +1.8 % previously anticipated, because “winter 2023-24 could still be a bit complicated in the context of the crisis energy “, according to its managing director, Olivier Garnier. The recovery will continue in 2025 with an expected growth at 1.8 %. On this horizon, unemployment, which would experience a “temporary” increase at more than 8 % over the period, would begin to reflect.
limited and temporary recession
These forecasts, however, remain subject to strong uncertainty due to the great volatility of energy prices, geopolitical tensions, especially the war in Ukraine, and the evolution of the health situation in China with the covid- 19, underlines the Banque de France.
This is why she publishes for next year a range of GDP evolution between – 0.3 % and +0.8 %. In all cases, the institution is more pessimistic than the government, which provides 2.7 % growth for this year and 1 % in 2023. “We do not exclude a recession, but if it is a recession, It will be limited and temporary, “said Olivier Garnier.
If they are going to settle somewhat, the prices of oil and gas will remain high and will continue to feed inflation, such as the food prices which have also been packed. The rise in prices would amount to 7.3 % at the end of 2022 and would reach a peak in the first half of 2023 (6 % over the year as in 2022 on average annual) before reflecting at 4 % at the end of next year and Return to around 2 % around 2024-25.
To measure inflation, the Banque de France uses the harmonized consumer price index (IPCH), which allows the comparison between European countries and grants a greater place at energy prices than the index Consumer prices used by INSEE and the French government.
In an attempt to tame the pricing and reach the target of 2 %, guarantors of price stability according to the European Central Bank (ECB), the latter posted its determination to continue its rate increases on Thursday. It expects 6.3 % inflation next year in the euro zone, higher than previously anticipated, and growth lowered to 0.5 %.
Under these conditions, households will remain struck by the portfolio, with a “limited drop” of their purchasing power in 2022-2023, which would start up afterwards.
Above all, public finances will accuse the blow: according to the Banque de France, the public deficit would remain “high”, of the order of 5 % of GDP in 2022-23 and 4.5 % thereafter. The public debt rate would remain at 112 % of GDP until 2025.