8:10 p.m .: The French economy penalized by the war in Ukraine
The growth of the French economy should be reduced in 2022 by 0.5 to 1.1 percentage points by the war in Ukraine, according to two scenarios presented on Sunday by the Banque de France. The French gross domestic product (GDP) will increase by 3.4% in 2022 if the price of oil averages over the year at 93 dollars, but by only 2.8% if this price reaches 119 dollars, specified the central bank which indicated that without the war, it would have raised its growth forecast from 3.6% to 3.9%. For 2023 and 2024, the Banque de France forecasts that growth, which again benefits this year from strong gains from the beginning of the year, will decrease to 2% then to 1.4% in the first scenario, qualified as “conventional”, and at 1.3% then at 1.1% in the second called “degraded”.
The consequences of the war will also be felt on the harmonized consumer price index (HICP), which should reach 3.7% this year, according to the first scenario, and 4.4% according to the second. This inflation indicator, which allows comparisons at European level and takes energy prices into account more than the national consumer price index (CPI) put forward by INSEE, rose to 4.1% over one year in France in February, but according to the models carried out by the Banque de France before the war, it should return to around 2% before the end of 2022.
The negative shocks of the conflict on the French economy are also of three types: increase in the prices of energy and raw materials, reduction in consumption and investment, as well as a reduction in demand addressed to the France which will affect foreign trade, further indicates the Banque de France.