“The French economy is not currently in recession, even if activity remains slow,” declared chief economist Olivier Garnier.
The Banque de France (BdF) confirmed on Monday that it anticipates zero growth in French gross domestic product (GDP) in the fourth quarter of 2024, compared to the third, due to the “backlash” post-Olympic and Paralympic Games in Paris.
“The French economy is not currently in recession, even if activity remains slow,” commented the chief economist of the BdF, Olivier Garnier, presenting the monthly economic survey conducted from December 20 to January 7 among of around 8,500 companies.
This “leads us to confirm our estimate of GDP growth of +0.2% in the fourth quarter excluding the impact of the Olympics”, i.e. “stable GDP” taking into account this negative effect estimated at -0.2%, he detailed.
Activity remained relatively stable in December in construction and industry, where the strength of aeronautics and agri-food contrasted with a sluggish automotive or textile-clothing sector.
It increased in services, notably accommodation and catering which benefited from the end-of-year holidays and the reopening of Notre-Dame de Paris cathedral.
In January, activity is expected to increase in the three sectors, but the dynamic observed at the end of 2024 in services is expected to run out of steam.
-In addition, order books are still considered thin in construction and industry, except aeronautics, “which does not suggest any significant acceleration (of activity) over the coming months,” said underlined Olivier Garnier.
Added to this are “uncertainties” linked to the French political context, which maintain the uncertainty indicator at a “high” level. Prime Minister François Bayrou must lift the veil on his government’s budgetary orientations during his general policy declaration on Tuesday.
In construction, “the wait-and-see attitude linked to the context of uncertainty, particularly on measures in favor of housing”, such as the zero-rate loan (PTZ), counterbalances the positive effect of the drop in interest rates and the restart of real estate loans, noted Mr. Garnier.
Concerning sales prices, the trend remains towards standardization in the three sectors of activity and recruitment difficulties continue to decline (30% of companies mention them), according to the monthly survey.
In December, the Banque de France lowered its growth forecast for 2025 from 1.2% to 0.9% due to uncertainties in France and abroad. Its governor, François Villeroy de Galhau, then expressed his concern for France’s very degraded public finances.
