French economic growth is set to ease in the coming months, making it harder for Emmanuel Macron’s government to deliver on pledges to rebuild public finances after the pandemic and Europe’s energy crisis.
(Bloomberg) — French economic growth is set to ease in the coming months, making it harder for Emmanuel Macron’s government to deliver on pledges to rebuild public finances after the pandemic and Europe’s energy crisis.
While the euro area’s second-largest economy will avoid a recession, national statistics agency Insee predicts the quarterly rate of expansion will drop to between 0.1% and 0.2%, from 0.5%.
“A slowdown in prices is giving a bit of oxygen to consumers and businesses,” Insee economist Julien Pouget said. “But there aren’t many sources of support as inflation and interest rates remain high.”
The weakening momentum raises doubts over the government’s forecast for a sharp improvement in the economy next year — an outlook that’s crucial to narrowing the budget deficit. The Finance Ministry is due to present its tax-and-spend plans at the end of the month.
To reach the current 1.6% growth projection for 2024, Pouget said quarterly expansion would need to accelerate to about 0.5% on average.
Insee’s projection for price pressures to continue easing in the remaining months of this year was little changed. It expects the national measure of inflation to recede to 4.2% in December after peaking at 6.3% in February.
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