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More global demand, less inflation: two factors that encourage the banking institution to consider an increase in GDP of 0.6% instead of 0.3% this year. The Banque de France believes neither in a lasting crisis linked to the pension reform nor in a banking contagion after the bankruptcy of the SVB.
Growth is back faster than expected, according to the Banque de France.
The banking institution doubled today its forecast for France’s gross domestic product (GDP). It should finally grow by 0.6%, instead of the 0.3% initially envisaged. The Bank of France remains more cautious than the OECD, which on Friday raised its forecast by one point to 0.7%, and then the government, which is banking on 1% growth.
“The recovery phase would clearly start again in 2024”, thanks to the take-off of household consumption, the Banque de France estimates. The Bank is still expecting growth to jump to 1.2% in 2024 and then to 1.7% (instead of 1.8%) in 2025.
This year, the better performances announced are linked to the conjunction of “a little more growth” of the world demand and “a little less inflation,” according to Olivier Garnier, the central bank’s chief economist.
Food inflation: a peak in mid-2023
Food inflation, which has taken over from energy inflation as the driver of price increases, is expected to peak “towards the end of the first half of the year”.
Prices would then rise more slowly, thanks to “the expected easing of agricultural input prices (…) and international agricultural commodity prices”. However, the Bank “does not expect food prices to fall by 2025“.
At the same time, the Bank forecasts a revival in household consumption thanks to a more dynamic average wage per capita (including overtime and bonuses). This should grow by 6% in 2023, 4.6% in 2024, and 3.7% in 2025. Purchasing power, however, is not expected to increase in the same proportions.
On the employment front, an improvement is expected in 2025, with a “decline” in the unemployment rate. However, the latter should increase in 2023 and 2024.
Reassuring
On the subjects – pension reform and banking shocks – that have recently clouded the macroeconomic horizon, the Banque de France has tried to be reassuring.
On one hand, it does not believe that the tensions linked to the opposition to the pension reform will have a lasting impact on the economy.
As for the two events that have affected the banking sector – the closure of Silicon Valley Bank in the United States and the uncertainty surrounding Credit Suisse – they “do not concern French and European banks,” said François Villeroy de Galhau, Governor of the Banque de France, on France Inter. French banks that he even described as “very solid.”
Is everything going well in the best of all possible worlds? While the tone of the Banque de France is reassuring, it notes a few downsides and uncertainties, namely a less buoyant “financial environment,” with exchange rates and borrowing rates less well-oriented than in December.
Read also >Bankruptcy of the SVB : are we heading for a new financial crisis?
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More global demand, less inflation: two factors that encourage the banking institution to consider an increase in GDP of 0.6% instead of 0.3% this year. The Banque de France believes neither in a lasting crisis linked to the pension reform nor in a banking contagion after the bankruptcy of the SVB.
Growth is back faster than expected, according to the Banque de France.
The banking institution doubled today its forecast for France’s gross domestic product (GDP). It should finally grow by 0.6%, instead of the 0.3% initially envisaged. The Bank of France remains more cautious than the OECD, which on Friday raised its forecast by one point to 0.7%, and then the government, which is banking on 1% growth.
“The recovery phase would clearly start again in 2024”, thanks to the take-off of household consumption, the Banque de France estimates. The Bank is still expecting growth to jump to 1.2% in 2024 and then to 1.7% (instead of 1.8%) in 2025.
This year, the better performances announced are linked to the conjunction of “a little more growth” of the world demand and “a little less inflation,” according to Olivier Garnier, the central bank’s chief economist.
Food inflation: a peak in mid-2023
Food inflation, which has taken over from energy inflation as the driver of price increases, is expected to peak “towards the end of the first half of the year”.
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More global demand, less inflation: two factors that encourage the banking institution to consider an increase in GDP of 0.6% instead of 0.3% this year. The Banque de France believes neither in a lasting crisis linked to the pension reform nor in a banking contagion after the bankruptcy of the SVB.
Growth is back faster than expected, according to the Banque de France.
The banking institution doubled today its forecast for France’s gross domestic product (GDP). It should finally grow by 0.6%, instead of the 0.3% initially envisaged. The Bank of France remains more cautious than the OECD, which on Friday raised its forecast by one point to 0.7%, and then the government, which is banking on 1% growth.
“The recovery phase would clearly start again in 2024”, thanks to the take-off of household consumption, the Banque de France estimates. The Bank is still expecting growth to jump to 1.2% in 2024 and then to 1.7% (instead of 1.8%) in 2025.
This year, the better performances announced are linked to the conjunction of “a little more growth” of the world demand and “a little less inflation,” according to Olivier Garnier, the central bank’s chief economist.
Food inflation: a peak in mid-2023
Food inflation, which has taken over from energy inflation as the driver of price increases, is expected to peak “towards the end of the first half of the year”.
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