Renewed optimism at the Banque de France. The institution doubled its growth forecast for 2023, in its forecasts published on Monday, March 20. The Banque de France now anticipates a 0.6% increase in GDP over the year.
« There is a little more growth and a little less inflation summed up the chief economist of the central bank, Olivier Garnier.
The institution justifies the doubling of its growth forecast by lower than expected inflation, and ” higher growth in global demand ».
A spike in food inflation towards the end of the first semester »
These pleasant surprises are, however, offset by “ the financial environment in the country, with exchange rates and borrowing rates less positive than in December. Even increased, the growth forecast for 2023 remains lower than those of the OECD (0.7%, raised by 0.1 point on Friday) and the government (1%).
As food inflation has taken over from energy inflation as the main driver of price increases, it is expected to peak. towards the end of the first semester », according to Matthieu Lemoine, one of the authors of the 2023-2025 macroeconomic projections.
Prices would then rise more slowly, thanks to “ the planned easing of the price of agricultural inputs (…) and the international prices of agricultural raw materials “, explains the institution. But ” we do not expect a fall in food prices over the horizon of our projection », That is to say 2025, warns Matthieu Lemoine.
banking turmoil “to follow closely”
All goods and services included, the harmonized consumer price index (HICP), the inflation barometer which refers to the European level and which the Banque de France uses in its projections, would stand at 5.4% on an annual average in 2023, against 6% expected so far. The HICP would then fall to 2.4% in 2024 then 1.9% in 2025, below the 2% mark targeted by the European Central Bank (ECB).
These forecasts of activity and inflation are nevertheless dependent on ” many hazards ».
« The indirect effects of the recent banking and financial volatility should be closely monitored, as recent events caused by the closure of the Silicon Valley Bank in the United States or the uncertainty surrounding Credit Suisse have reminded us. “, she explains.
« French banks are very solid »
The difficulties of American and Swiss banks have indeed caused chaotic sessions on European financial markets including the Paris Stock Exchange, investors fearing a major financial crisis.
THE ” two sets of problems », Crédit Suisse and failures of American regulation, « do not concern French and European banks “, assured Monday the governor of the Bank of France. ” French banks are very solid » et « no problem concerns French banks “, said François Villeroy de Galhau at the microphone of France Inter.
Sharp upturn in growth in 2024
The Governor of the Banque de France had already wanted to reassure Friday morning on BFM Business his confidence in the solidity of European banks, just like the French Banking Federation on Saturday for the banks of France. And the institution does not believe either in a lasting effect on the economy of the tensions concerning the pension reform.
« There may be temporary effects from one quarter to the next “, admitted Olivier Garnier, but” when we reason on the multi-year horizon (…) it is not likely to significantly affect the projection ».
These uncertainties put aside, the Banque de France is therefore counting on a clear upturn in growth in 2024 (1.2% as anticipated in previous forecasts) and in 2025 (1.7% against 1.8%).
No “inflationary spiral”
This revival should be supported in particular by an upturn in household consumption, whose remuneration should experience more dynamic growth than in recent years. The average salary per head, which includes overtime and bonuses, should grow by 6% in 2023, 4.6% in 2024 and 3.7% in 2025, without purchasing power jumping in the same proportions.
« This wage increase should not lead to an inflationary spiral “, specifies the Bank of France.
In terms of employment, the unemployment rate would increase transient ” in 2023 and 2024 before restarting a ” decline from 2025.
(With AFP)