2023-09-13 04:32:30
The “peak” has passed. Inflation is falling and this trend offers “encouraging prospects”, said Tuesday the governor of the Bank of France, François Villeroy de Galhau, confident in France’s capacity to “bring inflation back towards 2% by 2025.”
The French economy should therefore slow down in the third quarter while continuing to demonstrate “resilience” against a backdrop of easing prices, declared the governor of the Bank of France. “Our diagnosis is that a slowdown is undoubtedly confirmed. But it is a slowdown, not a reversal of activity,” said François Villeroy de Galhau, “and even less a recession.”
“There is a certain resilience in the French economy around weakly positive growth,” he continued, stressing that this took place in a context of declining inflation. After a second quarter marked by an unexpected rebound of 0.5% in gross domestic product compared to the first quarter, the central bank estimates that GDP should increase by 0.1% to 0.2% between July and September.
Tendency to calm down
On the price front, the trend is towards calming, or even falling, thanks in particular to the easing of raw material prices. According to the survey, the proportion of companies having increased their prices is falling further to “get closer to its pre-Covid levels”.
Thus, 4% of manufacturers said they had increased their prices in August, compared to 9% in July and 21% in August 2022. Above all, 6% lowered them, which “gives hope that the current disinflation movement will continue over the coming quarters”, underlined François Villeroy de Galhau who welcomed the “effectiveness” of monetary tightening.
Engaged in a fight against inflation through interest rate increases since the summer of 2022, the European Central Bank (ECB) must reveal on Thursday whether it is carrying out a new increase or if it is taking a pause.
France should escape recession
The Banque de France also plans to raise its annual growth forecast next week, currently at 0.7%. This revision is explained by the strength of activity in the second quarter and does not call into question the current economic slowdown – even if France should escape the recession that economic institutes predict for Germany, the leading economy in the eurozone.
Last Thursday, the National Institute of Statistics (Insee) raised its growth forecast for 2023 to 0.9%, getting closer to the 1% increase expected by the government and which economic institutes still considered optimistic ago. little.
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