INSEE on Thursday unveiled French growth figures in the fourth quarter of 2024, expected in net slowdown in a France plunged into a budgetary and private crisis of the renewed activity that could have breathed in the marked withdrawal of inflation.
The National Institute of Statistics and Economic Studies (INSEE) expects zero growth in the fourth quarter of 2024 after an increase of 0.4% in the third quarter attributable to the Olympic and Paralympic Games in Paris.
Over the whole of 2024, INSEE estimates that the gross domestic product (GDP) increased by 1.1%, as in 2023. It is better than Germany, in recession for the second year of ‘A row with a contraction of 0.2% of GDP, but much less than Spain, where economic growth reached 3.2%.
In France, “It is difficult to find a position (GDP) which is doing very well”Euphemis Maxime Darmet, economist at Allianz, interviewed by AFP.
Uncertainty
It points to the weakness of industrial production – with the exception of aeronautics – and a consumption of households without brilliance despite the decline at +2% of inflation in 2024 on average annual, against +4.9% the previous year. Energized by the Olympic Games, the services would undergo “A UNITED”.
In December, INSEE tapped on an increase in consumption of 0.9% in 2024, less than purchasing power (+2.1%). Households, which do not yet collect prices, have preferred to save, against the backdrop of fears concerning unemployment.
The political uncertainty which has agitated France since the dissolution of the National Assembly in June weighs on growth and doubles a budgetary crisis: the country is without budget for 2025 because of the fall of the Barnier government in December.
A sign of the shaken trust in investors, the gap between French and German borrowing rates at 10 years old has widened. The French rate now exceeds those of Spain and Portugal, once bad students in the euro zone.
This situation comes “Partly annihilating” The drop in interest rates started in June by the European Central Bank (ECB) and which could continue on Thursday, after recovery intended to lower inflation, underlines Maxime Darmet.
Heying discussions
The beginning of 2025 also promised, in a difficult international environment, where US President Donald Trump brandished the threat of increased customs duties.
In France, François Bayrou’s new government aims to achieve more than 50 billion euros in budgetary effort this year to bring the public deficit to 5.4% of GDP, compared to around 6% in 2024. But negotiations for S ‘to match with socialists on a budget of ” compromise “ are stormy, always hovering the risk of censorship.
“Degraded confidence and uncertainty surrounding the 2025 budget continue to weigh on domestic demand and this may continue in the coming months”underlines Charlotte de Montpellier, economist at ING, in a note.
The government lowered its growth forecast from 1.1% to 0.9% for 2025. For its part, INSEE tables a 0.2% increase in GDP in the first and second quarters, the horizon of its forecasts.
The reflux of inflation would continue – INSEE sees it 1% over a year in June and the government 1.4% on average over the year – while the electricity bill for most households will drop on average of 15% on February 1.
However, the request should remain “Depressed”assigned in particular by more limited public spending: “Consumption would not accelerate” And companies’ investment would drop by 2%, advance Stéphane Colliac, economist at BNP Paribas, in a note.
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