PARIS (Reuters) – The French economy should grow by 0.9% in 2023, estimates the Banque de France (BdF), which raised its forecast thanks to a second quarter better than expected, while lowering those for 2024 and 2025.

In its latest macroeconomic projections published on Monday, the central bank raised its growth forecast for France’s gross domestic product (GDP) by 0.2 points this year, bringing it closer to those of the government and the European Commission which are counting on a increase of 1%.

It thus takes into account the positive growth surprise in the second quarter, which reached 0.5% while the BdF anticipated 0.1%.

“The strong growth in the second quarter does not herald the start of a dynamic recovery,” nevertheless warns the central bank.

France is expected to post growth of 0.1% to 0.2% in the third quarter, and 0.2% in the fourth quarter, according to its projections.

“Then, the upward revision of energy prices over our forecast horizon, and especially the downward revision of global demand addressed to France, lead us to slightly lower our forecasts for the years 2024 (0.9 % against 1%) and 2025 (1.3% against 1.5%)”, continues the institution.

At the same time, inflation should continue to fall despite the rebound in energy prices, described as temporary by the BdF which expects a rate of 4.5% over one year in the fourth quarter.

The jump in oil prices during the summer, linked to the supply restriction policy of Russia and OPEC, raised fears of an interruption in the decline in inflation that began during the first half of the year. .

“This new increase is, however, of a different nature and incommensurate with the shocks observed in 2021 and 2022” and therefore does not “call into question our forecast of a downward trajectory of inflation”, estimates the BdF.

With regard to food products, the central bank plans a “progressive stabilization” of prices, without taking into account a possible specific downward effect of the next negotiations between producers and distributors.

“In the absence of a new shock on imported raw materials, total inflation would return to around 2% in 2025,” predicts the BdF.

(Written by Corentin Chappron, edited by Blandine Hénault)

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