France: spectrum of a recession on a background of acceleration of inflation

While Bercy estimates that the country will display a positive growth rate in 2022, the signs of a drop in activity are multiplying.


seen from Bercy, so far, everything is fine. Despite a first negative quarter, where the gross domestic product (GDP) posted a decrease of 0.2 point, France will experience positive growth this year, assures the Minister of the Economy, Bruno Le Maire, confident in the “capacity of resistance “of the French economy. Admittedly, the government plans to revise its growth forecast, currently fixed at 4 %, at the end of June, but it resolutely excludes the risk of recession.

Would it sin by excess of optimism? Against the backdrop of acceleration of inflation, which reached 5.2 % in France in May, economists are much more reserved than the executive on what awaits the French economy in the coming months. “The probability of being in recession is far from zero,” says Philippe Waechter, chief economist at Ostrum Asset Management. The fault of war in Ukraine, upwards of energy prices and raw materials, but not only.

“We had an environment drawn for twenty years by the Chinese economy: this is no longer the case. Today, we do not see what could draw the request up,” said Waechter. The World Bank took note of this phenomenon by lowering, Tuesday, June 7, its global growth forecast to 2.9 %, while it was still counting in January on growth of 4.1 %.

The French Observatory of Economic Conditions (OFCE) also calculated the impact of multiple planetary shocks that accumulate: increase in energy prices, supply difficulties, geopolitical uncertainties, without forgetting the hardening come from monetary policy. For this economic analysis organization, these shocks would amputate French growth, which would be only 2.7 % in 2022, against the 4.2 % planned at the start of the year. The OCFE estimates that economic policy measures will compensate for the effects of the crisis up to 0.8 % GDP. But he does not anticipate a recession proper.

The activity, in the second quarter, would progress weakly, of the order of 0.2 %, and then 0.3 % in each of the following two quarters. Paradoxically, while inflation erodes purchasing power, now at the heart of government concerns and axis of future economic measures, it is consumption, which represents more than half of French GDP, which would save the activity. “In the first quarter, household consumption fell by 1.5 %, the worst figure since 1950, which demonstrates that households quickly adjusted the level of their consumption down their purchasing power, argues Mathieu Plane, deputy director of the Department Analysis and forecasting of the OFCE. Insofar as, on the one hand, geopolitical uncertainties fell in April and where, on the other hand, the level of savings remains very high, We do not expect a new drop in consumption in the second quarter. “

You have 40.14% of this article to read. The continuation is reserved for subscribers.

/Media reports.