PARIS (Reuters) – The Banque de France plans a gradual exit from inflation without recession, allowing a clearer resumption of growth in 2025 and 2026, the financial institution announced on Tuesday in its quarterly projections.
French GDP should increase by 0.8% this year, then by 1.2% in 2025 and 1.6% in 2026, according to the BdF.
These forecasts remain unchanged for 2024 compared to those published in March, but the Banque de France had reported a forecast of 1.5% in 2025, and 1.7% for 2026, during its previous projection.
“After having reached another 5.7% on an annual average in 2023, total inflation would decline significantly to fall on an annual average to 2.5% in 2024, then to 1.7% in 2025 and 2026, due to the decline in food prices,
energy and manufactured goods”, writes the BdF.
The financial institution’s forecasts were completed before Emmanuel Macron’s surprise announcement to dissolve the National Assembly, following the victory of the National Rally in the European elections.
Furthermore, the French economy should progress very slightly in the second quarter with growth of 0% to 0.1%, the Banque de France (BdF) announced on Tuesday in its monthly economic survey.
GDP increased by 0.2% in the first quarter of 2024, recalls the BdF.
“According to the business leaders participating in our survey, after being sustained in April, activity declined in May in industry and construction, mainly due to holidays and closures linked to the positioning of public holidays; it is progressing on the other hand in commercial services”, writes the financial institution.
(Reporting by Leigh Thomas, Zhifan Liu)
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