GARD Update on the economy in 2024 by the governor of the Banque de France

GARD Update on the economy in 2024 by the governor of the Banque de France
GARD Update on the economy in 2024 by the governor of the Banque de France

The governor of the Bank of France sent his letter to President Emmanuel Macron, an annual republican tradition since 1945. He gave an update on inflation, the unemployment rate and purchasing power.

The European policy carried out this last year has made it possible to win the battle against inflation according to the letter written by the governor of the Bank of France. In 2023, the inflation rate was 7%. Currently it is 2.9%. The Banque de France affirms its commitment to reduce inflation to 2% by 2025.

The policy rate is the interest rate set by the central bank for loans made to banks. It is currently 4% in Europe and will fall over the course of 2024 so that loan rates decrease. In addition, in France, sales prices are down compared to 2023. Overall, current prices in France are increasing very little.

Faced with the French economic slowdown, GDP (gross domestic product, measure of a country’s economic activity) is stagnating. In 2024, GDP will be driven by household consumption and in 2025, it will be driven by businesses. To then regain a general dynamic thanks to the growth of all economic players.

Rise in unemployment rate

In France, the unemployment rate is increasing and is expected to reach 7.8% in 2025. However, full employment remains a real ambition for the years to come. However, the rate remains well below the 2013 peak of 10.5%. The average salary per worker slowed down at the end of 2023 because the revaluation of the minimum wage was lower and annual company negotiations were more moderate. In 2024, households will drive the French economy. In addition, salaries will increase on average by 3.2% this year compared to the previous year.

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