2024-12-16 18:35:00
War in Ukraine that is bogged down, conflict in the Middle East, motion of censure… Faced with a “double uncertainty” at a national and international level, on Monday 16 December the Bank of France revised its forecasts downwards by 0.3 points GDP growth for 2025, at 0.9%.
The forecast for 2026 was also revised downwards from the Banque de France’s September projections, by 0.2 points to 1.3%, which is now also the forecast for 2027.
For 2024, the projection remains at 1.1%, as in 2023, based on a fourth quarter in which growth would be zero.
The impact of censorship
These new macroeconomic projections have been made “in a national and international context of increased uncertainties”explained Olivier Garnier, director general of statistics, studies and international at the Banque de France, in a press conference on Monday.
The data were defined on November 27, a week before the Barnier government’s censure motion, with public finance hypotheses close to the finance law which should have led to a reduction “sensible” of the public deficit, which is expected to go from 6.1% of GDP this year to 5% in 2025.
From now on, the Banque de France forecasts a public deficit of between 5% and 5.5% of GDP next year.
That’s his reference scenario “an exit from inflation without recession”with however a recovery that would be delayed to 2026 and 2027 compared to previous projections, and which would be achieved under the effect of lower inflation and the easing of monetary policy, while ECB rates have started to fall since June.
Inflation (expressed in a harmonized index that allows European comparisons) is expected to be 2.4% on annual average this year, then 1.6% in 2025, 1.7% in 2026 and ‘1.9% in 2027.
An unemployment peak in 2025 and 2026
Even the Banque de France predicts that the labor market “begins to enter a transitional slowdown phase”which is expected to remain focused on 2025.
The unemployment rate would peak in 2025 and 2026, while remaining below 8%. “before starting to decline again following the resumption of activity”.
Finally, note that these forecasts are subject to both uncertainties related to the country’s political situation and international risks.
The reference scenario chosen by the Bank does not take into account the risk of trade tensions in the event of an increase in customs duties in the United States, the effects of which it judges “difficult to quantify”.
Overall, he concludes, the risks compared to the projection presented on Monday “they are biased downwards for growth”.
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