2023-09-07 18:09:30
A shallow do not do the spring. While the second quarter was marked by more dynamic economic activity than expected, and by a slowdown in price increases, the French economy has now entered a phase of deceleration, announces INSEE in its published economic update Thursday September 7.
After growth of 0.5 points between March and June, GDP should only progress in a range of 0.1 to 0.2% in the third and fourth quarters, for final annual growth to barely reach 0.9%. The growth overhang for 2024 (this is the growth recorded at the end of 2024 if activity did not increase by an inch throughout the year) shows a timid +0.3%.
However, the government is currently preparing its budget with the assumption of GDP increasing by 1.6%… But, to achieve this, activity would need to increase by 0.5% per quarter, throughout 2024.
Rise in energy prices
In fact, all the indicators scrutinized by INSEE are stalling. On the household side, INSEE notes degraded confidence in the national economic situation. Inflation forecasts are not enough to reassure them. Down from last year (+5.2%), it should however remain quite high between now and December, at 4.2%.
Energy is once again becoming an inflationary element, driven by a rise in oil prices and the end of regulated gas prices in August (this brings 0.2 points of inflation, according to INSEE) .
But as announced before the summer, it is the service activities which should be the main factor in the rise in prices at the end of the year. Because their selling price is closely linked to the level of salaries, and therefore to the increases recorded in recent months, but also because services weigh around half of the price index.
Decline in food consumption
The consumption of French homes is still affected. It is certainly increasing in value, that is to say in euros spent, but it is decreasing in volume (quantities purchased), in general and even more strongly with regard to food products (1).
Households are therefore adapting. In June, 47% of households surveyed by INSEE declared having changed their purchasing habits – compared to 37% in December 2022 – in the direction of less consumption (14%), diversification of their stores (12 %) and purchasing cheaper products (17%).
Weight of interest rates
The concern of households also translates into a strong tendency to save, for those who can, a tendency which does not go away. The savings rate exceeded 18% in the first half of 2023, a record. However, INSEE predicts that household consumption should support activity in the third quarter.
The picture is also relatively gloomy at the company level. The business climate, which measures the perception of the economic situation by business leaders, fell below its long-term reference average in August. If certain companies, in the automobile industry for example, emerge from a tense situation for their supplies, and therefore for their produced volumes, company investment could be penalized between now and December by the persistence of interest rates. high, while central banks maintain a very strict policy to combat inflation.
Price freeze
Nevertheless: the average margin rate of companies increased significantly in the second quarter. But this improvement is linked to the fall in the prices of oil and imported products, while employee productivity has recovered slightly, notes Julien Pouget at INSEE, according to whom it is still too early to meaningfully interpret this observation. .
Other phenomena will be able to be deciphered more closely in a few weeks: the deceleration of job creation observed in the second quarter, and the effects of the price freeze on 5,000 mass distribution references, announced by the Minister of the Economy Bruno The Mayor at the end of August.
In the meantime, France can console itself. It should avoid recession, which Germany will not stop.
#Inflation #interest #rates #energy.. #brake #growth #French #economy #mid2023