Europe 1 with AFP 11:53 a.m., January 30, 2024

French GDP finally increased by 0.9% in 2023, INSEE announced on Tuesday, close to the government's forecast of 1%, but at an atypical pace, with a very good second quarter and the other three zero.

French GDP finally increased by 0.9% in 2023, INSEE announced on Tuesday, close to the government's forecast of 1%, but at an atypical pace, with a very good second quarter and the other three zero. Growth in gross domestic product thus remained sluggish from October to December, as in the first and third quarters (revised from +0.1 point to 0%), while the second was much more flamboyant, at 0.7 % (also revised by +0.1 point).

This good quarterly growth occurring almost at the start of the year, as well as a contribution of 0.3% from 2022, allows us to achieve an increase in GDP of 0.9% over the entire year. “We can see the glass half empty,” commented Tuesday on France Inter the director general of the National Institute of Statistics, Jean-Luc Tavernier, “with indeed a fairly significant slowdown during the year 2023; or the glass half full, we're getting through this without a recession" despite a context of inflationary crisis.

Decline in domestic demand

France is also doing better than the euro zone in general, whose growth reached 0.5% over the past year, and than Germany which could experience two successive years of recession, after -0.3%. for its part in 2023. The fourth quarter was, however, marked by a drop in business investment (-0.7% after +0.2% in the third quarter) and household consumption (-0.1% after +0.5%).

Conversely, foreign trade contributed positively to GDP growth in the fourth quarter. But this is less due to exports, barely stable (-0.1% after -0.6%), than to imports in sharp decline (-3.1% after -0.4%). For Maxime Darmet, French economist at Allianz Trade, "it is difficult to see positive elements in this report" from INSEE, "with an economy that is stagnating in four of the last five quarters". “What is worrying is the decline in domestic demand,” he observes, with “household consumption still not picking up, and especially business investment which is finally giving way.”

“Reason for hope”

Maxime Darmet particularly notes the 0.8% decline in business investment in manufactured products in the fourth quarter: "there is no reindustrialization, unlike what is happening in the United States", he deplores. -he. For the future, everything depends on a recovery in household consumption. The latest INSEE economic survey showed a renewed appetite for purchases. “This is a reason for hope for 2024,” said Jean-Luc Tavernier, who is banking on a continued slowdown in inflation and a revival of purchasing power.

The institute sees inflation returning to 2.5% at the end of June, and even around 2% if we exclude the products with the most volatile prices. Despite these hopes, and against a backdrop of unemployment which could rise slightly, according to INSEE, the government forecast of growth of 1.4% this year seems more than optimistic. Allianz Trade has a forecast of 0.7%, similar to that of many economists. The Banque de France rather anticipates 0.9%.

Public finance slippage?

“The reasoning could lead to it accelerating at the end of 2024, probably not to the point of going up to 1.4%,” Jean-Luc Tavernier cautiously remarked on Tuesday. The INSEE forecast horizon ends at the end of June, and the Institute anticipates two first consecutive quarters of +0.2% growth. At this rate, and with a low growth rate of 0.1% in 2023, even the last two quarters at 1% growth each would not be enough.

The Minister of Finance Bruno Le Maire must already face a slippage of two billion euros in the State deficit at the end of 2023. A growth forecast which would not be there would further limit the possibility of bringing back this year the public deficit at 4.4% of GDP, before a hoped-for return to below 3% in 2027. And even more difficult if current social demands, like those of farmers, result in additional spending.