The Banque de France has published its monthly business survey on French growth. It confirms that it almost completely stagnated in the second quarter of 2023. The disinflation process is also underway, according to the central bank.
The Banque de France assesses growth for the second half of the year
A bloodless growth, very close to stagnation. This is what emerges from the latest assessment of the Banque de France, which confirms its growth forecast of 0.1% for the second quarter of 2023. Activity has progressed more clearly in the services and construction sector, also in the industry sector, but to a lesser extent.
For the month of July to come, the Banque de France report forecasts stable activity in industry, an increase in the service sector, and a decline in construction. This is due to cyclical aspects, linked to the summer period.
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The process of disinflation continues
If inflation still weighs heavily on French households, its progression is down sharply according to the assessment of the central bank. Manufacturers believe that prices are down sharply for raw materials, and that they are stabilizing for finished products.
The consequence is that business leaders report for some a fall in prices, or at least a cessation of price increases. Olivier Garnier, the director general of statistics at the Banque de France, explains however that it will be necessary to wait before these reductions are effective on the shelves of shops:
“This confirms that the process of price normalization is well underway, but the effective transmission of lower producer prices to final selling prices may take time. […] The downward adjustment process may take longer than the upward adjustment.»
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Inflation will remain present in the years to come
The Minister of Finance, Bruno Le Maire, however, temporized the ardor of those who would see a sharp drop in inflation rates in the coming months. He estimated two weeks ago that France would not return to its low pre-Covid rates:
“When we come out of this crisis, will we keep inflation levels like those we experienced before the Covid crisis? The answer is no. […] I don’t think we’re going back to those very low rates, around 0%, that we’ve had in years past.»
For June, inflation rose to 4.5% over the year according to INSEE, while 4.1 million French people are still considered “financially fragile» by the Bank of France.
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Sources: Reuters, Insee
Image: Denis Morin via Wikimedia Commons (CC BY-SA 4.0)
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