Gross Domestic Product (GDP) growth, which reached 2.6% in 2022, slowed sharply to 0.1% in the fourth quarter, weakened by household consumption directly affected by soaring prices.

Last year, it mainly benefited from the rebound in activity recorded in the second part of 2021 "at the end of the health crisis", explained the National Institute of Statistics (Insee).

Quarter after quarter, it was then "significantly less dynamic".

The figures are however better than expected, as INSEE was expecting GDP up 2.5% and a contraction of 0.2% in the fourth quarter.

While the government forecast 2.7%, the Minister of the Economy, Bruno Le Maire, hailed "sustained" growth last year despite the tremors of the war in Ukraine.

"It testifies to the strong rebound of our economy after the Covid shock and its resilience in the face of the energy crisis," he said.

The good performance of French activity masks a contrasting picture, however.

The last three months of the year were marked by a sharp drop in household consumption of goods and services (-0.9%), the traditional engine of growth, penalized by a decline in purchases of food products.

Energy consumption also fell in the fourth quarter, due to a very mild autumn but also to energy sobriety efforts, while the government rolled out support measures worth billions of euros to contain bills. .

In France, consumer prices jumped by an annual average of 5.2% in 2022 and even flirted with 6% in the fourth quarter, with surges for energy and food.

Stagnation or recession?

This lower household consumption weighed on the production of goods and services, which decelerated by 0.2% over the October-December period, also affected by the fall strikes in the refineries.

In the energy sector, production remained "low", according to INSEE, disrupted by the maintenance of nuclear reactors.

Conversely, foreign trade made a positive contribution to GDP growth, with imports falling more sharply than exports.

Although they continued to progress, investments lost momentum (0.8% after 2.3% in the third quarter).

"It's a facade resistance of the French economy," commented Maxime Darmet, economist at Allianz Trade, interviewed by AFP.

"Consumption is doing badly and imports falling so much, it's not a very good sign: it means that domestic demand is still very weak".

This bodes ill for 2023, when inflation should continue to accelerate to a peak expected by INSEE of around 7% at the start of the year.

Having benefited so far from well-filled order books since the pandemic, “the manufacturing industry is starting to feel the effects of the global slowdown” with a drop in new orders, continues Mr. Darmet.

"This confirms" the scenario of "an economy entering a modest recession or at best stagnation in the first half of 2023", adds the economist.

The Banque de France expects a slowdown with 0.3% growth in 2023. It is more pessimistic than the government (+1%) which is counting on growth to initiate the recovery of public finances.

Also facing the energy crisis, Germany announced on Monday a 0.2% decline in its GDP over the last three months of 2022, but could narrowly escape recession in 2023.

© 2023 AFP