Economy: Banque de France more optimistic than expected for autumn – 10/11/2022 10:07

A stagnant economy was initially expected, but the forecasts have been revised upwards.


The Bank of France in Paris. (AFP / FRANCK FIFE)

Would growth resist? According to the Banque de France, the French economy could continue to grow, albeit very slightly, in the fourth quarter, with companies proving relatively safe despite geopolitical uncertainties and soaring energy prices.

The French economy could thus observe a “very slight increase” in its GDP in the fourth quarter e

not a stagnation as initially expected, the Banque de France pointed out in its monthly economic survey on Wednesday 9 November.

This forecast, which is not quantified, is “surrounded by very strong uncertainty mainly due to the international context,” said Olivier Garnier, director general of statistics, studies and internationals, during a presentation.

“At this stage (…) we are quite prone to a small positive risk compared to our initial zero growth forecast in the fourth quarter,” he added.

At the end of October, INSEE announced that it was aiming for zero growth in the fourth quarter, after a weak increase in GDP (+ 0.2%) during the summer, which several economists have presented as the latest leap. of the economy French economy.

The forecast of the National Institute of Statistics for the whole of 2022 (+ 2.6%)

however, it joins that of the Banque de France.

The government is aiming for an annual growth of 2.7% and underlines the small difference between these different forecasts, given the uncertainties.

International instability

Although the Banque de France does not explicitly mention the war in Ukraine, it nevertheless notes that the international context and in particular the geopolitical situation place many uncertainties on growth, as well as the impact of climate on energy supply.

In the long term, it anticipates an economic cycle that can be summarized in three “Rs”: resilience, slowdown and recovery in 2024.

The monthly business survey of firms shows that firms remain relatively confident and that the resilience phase is prolonged.

In particular, activity in market services and industry increased in October and stagnated in construction. Companies are expecting a similar trend in November.

Using data from other sectors, the Banque de France estimates that October GDP will decline slightly compared to September, mainly due to a decline in energy, trade and transport, but expects a recovery in November.

The institute’s survey, which questioned some 8,500 companies between the end of October and the beginning of November, points to two points of improvement, the difficulty of supply and the pace of price increase, both of which remain at high levels. but they do not increase.

Company orders remain “well supplied”, but hiring difficulties also remain important, if “they don’t increase anymore”.

energy anxiety

The Banque de France warns of cash flow difficulties, particularly for industrial companies, “with a deterioration that is confirmed”.

Olivier Garnier, however, qualified by saying that he does not see particular difficulties in the repayments of state-guaranteed loans granted to companies to cope with the consequences of the health crisis.

The institute has also begun asking companies about the impact of rising energy prices on their businesses and margins.

If it was limited in October, with a quarter of companies seeing an impact on their business (and only 7% a strong impact), the concern is greater for the next three months.

More than a third of companies across the three sectors combined (industry, services and construction) say they are concerned about their business

in the next quarter and this percentage rises to over 60% in industry and construction when it comes to margins.

The concern varies according to the amount of energy needed for the production process, the Banque de France points out, and the period “remains difficult” for companies.

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