French economy forecast to contract before recovering next year

French economy will contract this quarter, according to INSEE official statistics agency on Thursday (15 decembrie).

According to INSEE’s latest economic outlook, the euro zone’s second-largest economy will shrink 0.2% over the last three months of the quarter.

INSEE has reduced its projection from a previous projection of flat growth following refinery strikes and maintenance interruptions at some nuclear reactors that had reduced industrial output.

France was affected by a series o refinery strikes that occurred in October. Maintenance issues in France’s 56 nuclear reactors also reduced their power output to a 30 year low.

According to INSEE, the loss of nuclear production would reduce French economic growth by 0.4% in this year.

The latest forecasts for fourth quarter GDP show that France will experience growth of 2.5% in 2022. This is slightly less than the 2.7% predicted by the government during its budget planning.

INSEE predicts that France will return to growth next year with a 0.1% rate in the first quarter and 0.3% in quarter two.

Advertisement

Although it did not include all of 2023 in its outlook, INSEE predicted that the economy would experience growth momentum of 0.4% by mid-year. This implied growth would require 0.75% in the third and fourth quarters, respectively, to achieve the 1.0% annual growth target that the government has set for 2023.

INSEE provided an inflation outlook. It said that it would continue rising from 6.2% in November, to a peak in January and Februar at a 38 year high of 7%. Then it would fall back to 5.5% in the middle of the calendar year.

Inflation reached 7.1% in November using an EU-harmonised methodology to calculate price movements.

This article is shared:

EU Reporter publishes articles sourced from many outside sources that reflect a broad range of views. These articles do not necessarily reflect the views of EU Reporter.