The Bank of France indicated on Tuesday that it expects gross domestic product to be “more or less unchanged” in the fourth quarter compared to the summer, due in particular to the post-Olympic and Paralympic “backlash”.
The activity should record a “slightly positive progression” between October and December, but this increase would be counterbalanced by the “backlash” induced by the end of the Olympics, “estimated at -0.2 points of GDP“, specified the institution in its monthly economic report. survey, without quantifying the level of growth expected in the fourth quarter.
The Olympics fueled growth in the third quarter (+0.4%) by supporting the services sector. The business benefited in particular from revenues from ticketing and the sale of audiovisual rights.
For the whole of 2024, the Banque de France expects growth of 1.1%, as do the government and the National Institute of Statistics (Insee), which predict zero growth in the last quarter.
According to around 8,500 companies interviewed as part of the economic survey between October 29 and November 6, industrial activity increased in October, supported by aeronautics and the agri-food industry.
On the other hand, the automotive sector continues to suffer, especially “the production of electric cars, which suffer from Chinese competition and the decline in demand for these models”, underlined the Bank of France.
Industrial orders are still considered “degraded”, except in the aviation sector.
In commercial services, activity slowed in October while in construction, structural works benefited from the resumption of projects postponed due to the Olympics.
In November, the Banque de France estimated that activity should change “little” in industry and services, while it would decline in the construction sector.
It notes however that the uncertainty indicator, based on comments from businesses, remains “relatively high across all sectors”, with businesses citing “the national political situation and the impact of tax debates, as well as the international environment “, particularly the American elections which had not yet taken place at the time of the investigation.
As for prices, normalization has been confirmed, including in services, and “inflation should therefore remain under control”, according to the French central bank.
Recruiting challenges continued to decline, with 31% of companies reporting they experienced them in October compared to 35% in September.
Interview: Analyzing Economic Trends Post-Olympics
Time.news Editor: Thank you for joining us today, Dr. Martin Dupont, an expert in economic analysis and trends. The latest report from the Bank of France has painted a complex picture for the French economy as we approach the end of the year. To start off, can you explain what the Bank means by expecting GDP to be “more or less unchanged”?
Dr. Martin Dupont: Certainly! The Bank of France’s assessment implies that we are unlikely to see significant growth or contraction in the fourth quarter compared to the previous quarter. Specifically, they expect a slight positive progression in activity, but it’s tempered by what they refer to as a “backlash” following the Olympics and Paralympics. This means while certain sectors may benefit from residual effects of the Games, others are likely to pull back, resulting in a net effect that stabilizes the GDP.
Time.news Editor: The backlash from the Olympics is an interesting point. How substantial do you think this impact will be on GDP, considering they estimate it at around -0.2 points?
Dr. Martin Dupont: It may not sound like a lot, but in economic terms, this backlash indicates a significant adjustment phase. The Olympics undoubtedly stimulated growth in the third quarter—boosting sectors like services through ticket sales and audiovisual rights. However, once the event concludes, those immediate benefits fade. This can lead to a contraction in economic activity, particularly in tourism and related services, thus the estimated -0.2 points is a reflection of that loss.
Time.news Editor: We also saw a mention of varied performance across different sectors. Could you elaborate on that?
Dr. Martin Dupont: Absolutely! Industrial activity has shown signs of improvement, especially in aeronautics and agri-food. These sectors have been buoyed by increased orders and demand. Yet, the automotive sector is struggling, particularly with electric vehicle production, facing stiff competition from Chinese manufacturers and a declining demand. This duality reflects the broader trends: some sectors are thriving while others are in distress, resulting in an uneven overall economic landscape.
Time.news Editor: That brings us to the projection for the entirety of 2024 with a growth expectation of 1.1%. Given the current struggles in certain sectors, how realistic do you think this projection is?
Dr. Martin Dupont: The projection of 1.1% growth acknowledges the mixed signals we’re receiving. It’s a moderate expectation that seems achievable if resilient sectors like aeronautics can sustain their momentum and if the automotive sector manages to adapt to the competitive pressures. However, external factors like global economic conditions and the trajectory of consumer demand could significantly influence this outlook. If structural issues in sectors like automotive persist, we could see a downward adjustment in these expectations.
Time.news Editor: With the economic survey data in play, how do you assess the optimism or lack thereof among businesses, particularly given the “degraded” conditions of industrial orders?
Dr. Martin Dupont: The sentiments expressed by businesses reflect a cautious optimism. The increase in industrial activity in certain sectors offers a glimmer of hope, yet the general sentiment is tempered by the reality of stagnant orders in many industries. This dual perspective signifies that while some businesses are ready to invest and expand, others are hesitant, reflecting uncertainty about future demand. Hence, the economic climate remains fragile, and businesses are likely keeping a close eye on market developments.
Time.news Editor: as we think about the immediate future, which sectors do you believe will be pivotal for driving growth in the next few months?
Dr. Martin Dupont: The aeronautics sector seems poised for continued growth, particularly as travel resumes globally. Additionally, the agri-food industry, with its stable demand, is also likely to contribute positively. However, to foster broader economic health, significant attention needs to be paid to revitalizing the automotive sector, particularly as it shifts toward electric vehicle production and innovation. Fostering competition and adaptability within these sectors will be critical for sustainable growth.
Time.news Editor: Thank you, Dr. Dupont, for your insights. It will be interesting to see how the economic landscape evolves in the coming months as these various factors play out.
Dr. Martin Dupont: Thank you for having me. I look forward to seeing how these dynamics unfold!