2023-10-12 18:40:27
► 1 – Persistent tensions for the international and French economy
French households and businesses are still evolving, as in all countries, in a very uncertain context, indicates INSEE in its latest economic report, published Thursday October 12. After the Covid-19 pandemic, then the war in Ukraine, which tested production and supply chains around the world, and after a relative calm over the past few quarters, volatility and twists and turns persist.
Oil prices have risen sharply this summer, even before the new increase in geopolitical tensions in the Middle East, since October 7, 2023. INSEE, which at the beginning of September expected an average barrel price of €79 by at the end of the year, increased this working hypothesis to €88 per barrel.
This vulnerability, which affects the balance of businesses, is combined with the rise in interest rates, which weighs on households and their ability to purchase housing or certain consumer goods.
Everything put together, “world trade is struggling to restart and business surveys suggest little dynamism among France’s European partners, both in industry and in services”, summarizes INSEE.
► 2 – Still modest growth
INSEE still expects modest progress of 0.9% in French activity, despite a surprisingly dynamic second quarter. The second half of the year will be marked by a slowdown compared to the start of the year, and the growth gain for 2024 – that is to say if GDP does not grow at all next year – modestly amounts to +0.4%.
In this regard, the government forecast of GDP increasing by 1.4% in 2024 appears overestimated.
► 3 – Inflation confirms its decline in France
Despite the recent rise in oil prices, inflation is still falling in Western countries. In France, this oil rebound certainly offset, for September, the slowdown over a year in other prices (food, services, manufactured products). However, INSEE emphasizes that food prices experienced their first monthly decline in September (– 0.3%) in almost two years.
By December 2023, the increase in food prices would be 7% over one year (compared to +15.9% last March). All inclusive, inflation would amount to +4.4% over one year (compared to +5.9% over one year in December 2022). And underlying inflation (excluding energy and food) would be 3.9% over one year (compared to 5.3% over one year in December 2022).
► 4 – Rising salaries and benefits
After falling in real terms (due to inflation) in the first half of 2023, INSEE forecasts a rebound in wages in the second. On an annual average, nominal salaries (displayed on the pay slip) would thus increase at the same rate as inflation.
As for social benefits, they are, like the minimum wage, largely indexed to inflation, the progression of which they mechanically follow.
In total, INSEE calculates that household purchasing power will increase by +1.2% in 2023, or +0.7% per consumption unit (an index which takes into account the number of people in each household). “Obviously, this indicator remains an average, which hides disparities,” warns Julien Pouget at INSEE.
► 5 – A slight increase in unemployment
While France has recorded record job creations for several quarters, these are expected to slow down by the end of the year. In June, INSEE forecast 175,000 net creations over the entire year 2023; this forecast is reduced to 133,000, mainly for the first half of the year.
It is still a little early to analyze this slowdown, which nevertheless occurs in parallel with a slowdown in growth, and against a backdrop of a resumption of bankruptcies. In fact, INSEE forecasts a slight increase in unemployment in the second half of the year, to 7.3% of the active population, compared to 7.2% until then.
► 6 – Corporate margins higher than before Covid
In 2023, the margin rate of non-financial companies would be at an average level slightly higher than that before the health crisis, thanks to the sharp slowdown in the price of inputs (energy, raw materials, etc.) and a relative wage moderation: according to INSEE, the average margin would thus be 32.9%.
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