2023-04-28 10:13:33
Posted Apr 28, 2023, 7:53 AMUpdated on Apr 28, 2023 at 10:13 am
France is settling into slow-speed growth. Over the first three months of the year, GDP rose by 0.2%, according to the first estimate from INSEE published this Friday morning. A rate higher than that recorded in the last quarter of 2022 during which economic activity finally stagnated (against an increase of 0.1% initially announced). For the Institute of Statistics, the growth overhang for the year would amount to 0.4% in the first quarter.
Something to reassure the Minister of the Economy, Bruno Le Maire, who expects growth of 1% in 2023. The published figures attest to the “solidity” of the French economy, the tenant of Bercy also welcomed. .
In April, however, the pace of inflation accelerated to 5.9% year on year (against 5.7% in March) still driven by food (+14.9%) and services (+ 3.2%). Over one month, however, the rise in prices slowed to 0.6%, after +0.9% in March. The government is aiming for a decline in inflation in the second half to a revised annual average of 4.9% in the stability pact which will be sent by the government to Brussels.
1.3% drop in spending in March
Looking closely, the picture drawn by INSEE statistics highlights the caution of households in this context of still high inflation.
Between January and March 2023, “domestic demand contributes negatively to growth”, thus notes INSEE. In fact, household consumption, the main driver of growth in France, stalled over the period, and even fell by 1.3% in March. Faced with the waltz of labels, food purchases fell by another 2.3% after having already fallen by 4.7% last year. Only expenditure on “services” – in particular accommodation and catering – seem to save through the restrictions imposed by the French (+0.6%).
In addition, “for the sixth consecutive quarter” their investments, highly correlated to the real estate market, also fell (-1.4%).
Increase in industrial production
On the business side, industrial production, on the other hand, rose by 0.4%. Supported by the easing of supply difficulties, sectors such as the automobile or aeronautics have started to move forward again. Energy production has also rebounded with the reopening of nuclear power plants. The construction sector, on the other hand, continued to slump. The effects of the rise in interest rates are also beginning to be visible on corporate investment. After sustaining growth last year, it is showing the first signs of losing momentum (+0.1%).
While inventories had experienced their strongest increase in fifty years in 2022, companies also began to destock in the first quarter. This weighs for 0.3 points on growth, specifies INSEE. If the black scenario of a disruption of energy supplies this winter has not occurred, business leaders now fear a weakening in demand as shown by the latest business climate.
Manufacturers, on the other hand, observe an improvement in order books from abroad. What foreign trade reflects. In the first quarter, it made a positive contribution to GDP growth thanks to falling imports (-0.6%) and more dynamic exports (+1.1%).
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