The French economy should remain just above the waterline in the first half of 2023, with a resilient industry and household consumption rebounding slightly despite prices which will continue to rise, but a little less quickly.
Overall, consumer price inflation should remain on a “plateau”, around 6% year on year in February, levels not seen in nearly four decades, before gradually falling to 5% in June, according to the report. National Institute of Statistics (INSEE).
“This does not mean that the price level will fall, it means that overall, the price index will evolve less quickly than a year ago”, specified Julien Pouget, head of the business cycle department of the Insee during a press conference.
While past shocks, linked in particular to the war in Ukraine, should continue to produce their effects and fuel price growth, the gradual normalization of global supplies and a falling oil price will certainly lead to a downward trend.
A surge in food prices is however feared. This sector will record up to 13.7% inflation over one year in February, according to INSEE. “We are expecting a high level of inflation in the coming months, particularly for basic food products, with double-digit inflation,” announced Economy Minister Bruno Le Maire in December, adding that “ difficult months” were “ahead of us”.
Core inflation (excluding energy and fresh food products) will however remain above this level, at 5.7% in mid-2023.
The country’s growth is improving
The year 2023 should start as 2022 ended, also explained INSEE, with “modest” growth. After having progressed by a timid 0.1% in the fourth quarter, gross domestic product (GDP) will thus record an increase of 0.2% in the first quarter then by 0.2% again in the second quarter, against respectively 0, 1% and 0.3% predicted previously.
“We are in a rather hesitant economic situation, neither frankly favorable, nor frankly unfavorable”, summarized Julien Pouget. It is “a hesitant situation and, all in all, relatively resistant”, he further estimated, however, pointing to a “strong dichotomy” between businesses and households. However, these forecasts do not take into account the possible impact of strikes against the pension reform, which could have a greater impact on certain sectors such as transport.
The massive mobilizations against previous pension reforms had cost around 0.2 points of quarterly GDP, recalled Julien Pouget. “Since then, telework has developed a lot for health reasons at the start, which is possibly likely to lessen the macroeconomic impact of these strikes. »
INSEE has not provided a forecast for the whole of 2023, while the government is counting on growth of 1%.