INSEE maintained its growth forecast of 2.6% in 2022. However, inflation and concerns about energy supplies could lead to a slowdown in activity.
France’s gross domestic product (GDP) is expected to stagnate this fall but cause energy supply worries and high inflation”serious threatson growth in Europe, INSEE said on Thursday. In its economic report, the National Institute for Statistics maintains its growth forecast of 2.6% in 2022 for France, but does not rule out a decline in activity in the fourth quarter due to economic difficulties, energy supply and production stops.
INSEE bases its forecast on modest Q3 growth (+0.2% as announced in the September economic update) after a dynamic Q2 (+0.5%) as reported in this note entitled “An autumn full of threats for Europe“. In the last three months of the year there is uncertainty due to a “darkening international scenario” explained Julien Pouget, head of the INSEE situation department, during a press conference on Thursday. “International trade slowed into year-end, inflation remained high, pan-European energy supply concerns, monetary tightening amid heightened market volatility‘ he listed to illustrate the threats to French but also global growth.
Fear of “Possible Production Losses”
The forecast of GDP stagnation in the fourth quarter is therefore a “intermediate scenario“which includes”resilienceof certain indicators, but also theFears of possible production losses“in the industry. Inflation, which was contained in September (5.6% yoy), thanks in particular to the discount at the pump, should then ease slightly in October.”would get up againin November, with the reduction in the fuel rebate to 6.4% over a year in December (compared to a previously forecast 6.6%).
Over the year, the inflation forecast goes from 5.3% to 5.2%, a much better forecast than for other European countries thanks to the “energy prices” and to “public measures to limit price increases‘ says Julien Pouget. However, the price increase weighs on household purchasing power, which is likely to fall more than expected in 2022 (-0.6% according to the indicator per consumption unit versus -0.5% originally expected). If support measures allow energy prices to be contained, it is food that has weighed the most since September, with inflation expected to end the year at almost 12% yoy.
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