Last June, the central bank said it was counting on gross domestic product (GDP) growth of 0.8% for France this year.
The Banque de France (BdF) will slightly raise its growth forecast for 2024 in mid-September, driven by good economic news on the inflation front and the success of the Olympic Games, its governor François Villeroy de Galhau said, while warning of the impact of the political impasse in the country.
“We have two pieces of good economic news: lastingly, disinflation, which will allow gains in purchasing power and a drop in interest rates, and more temporarily the success of the Olympic Games; the Banque de France will therefore slightly raise its growth forecast for 2024 in mid-September,” he said in an interview published Wednesday by the weekly Le Point.
In June, the BdF said it was counting on a growth in gross domestic product (GDP) of 0.8% for France this year. The government is counting on a 1% increase for 2024, but the resigning Minister of the Economy, Bruno Le Maire, indicated at the end of July that the growth of the French economy would “probably” be higher than this forecast.
A spread increased from 0.5% to 0.75% in a few days
In his interview with Le Point, Villeroy de Galhau nevertheless warns of the “two confidence shocks” that weigh on the outlook, linked in particular to the political situation in France, with President Emmanuel Macron still not having appointed a new Prime Minister, after a series of consultations and more than 50 days after the second round of early legislative elections.
“The first concerns our external lenders: the interest rate gap – the spread – between France and Germany has climbed from 0.5% before the elections to almost 0.75%, which is weighing on the financing of the economy,” said the governor of the BdF.
“The second shock is internal, and affects entrepreneurs: in the uncertainty, they risk postponing their investment and hiring plans. Households, for their part, may be tempted to save rather than consume. It is therefore essential to quickly provide clarity and credibility,” he added.
He also stressed that one of the economic priorities of the next government must be “the budgetary meeting”. The resigning Minister of Economy Bruno Le Maire warned on Monday of an increase in the public accounts deficit to 5.6% of GDP in 2024 and recommended that the next Prime Minister make some 16 billion euros in immediate savings on the budget for the current year.
