It’s a brutal slowdown. French economic activity stagnated in the first quarter, with zero growth (0%). This first estimate published this Friday by INSEE is explained in particular by the fact of a decline in household consumption against a backdrop of inflation and the war in Ukraine.
This estimate is well below expectations, the National Institute of Statistics having forecast growth of 0.3%, while the Banque de France was counting on a small increase in gross domestic product (GDP) of 0.25%.
Decline in household consumption
Household consumption, traditionally the engine of French growth, also “significantly” fell in March, by 1.3%. “This drop is mainly due to the decline in food consumption (-2.5%) and, to a lesser extent, that of energy consumption (-1.6%)”, specified the National Institute of the statistics.
How to explain this decline? The very strong Omicron wave in January, the rise in prices, in particular of energy, accentuated since the outbreak of the war in Ukraine at the end of February, have constrained household spending. More particularly in accommodation-catering and clothing-textiles. Inflation thus reached 4.5% over one year in March, unheard of since the mid-1980s.
The health crisis, still very present in January, further marked the production of goods and services in the first quarter (which increased by 0.5%), with a sharp drop in activity in the hotel and catering industry, education services , “linked to the closure of certain classes”, and conversely an improvement in health services. Goods production accelerated after two quarters of stability.
For the moment, investment is resisting, even if it is slowing down, with an increase of 0.2% in the first quarter, driven by investments in IT services in connection with the growing digitization of companies. Finally, foreign trade continues to recover, even if it is “however at a slower pace than the previous quarter”, underlines INSEE, with a 1.5% increase in exports, when imports increased by 1 .1%.