After the euphoric post-Covid recovery in 2021 (+6.8%), activity increased by 2.6% last year, according to the statistical institute Insee, holding firm in the face of the tremors of the war in Ukraine which sent energy prices soaring.

However, it entered a risk zone with a slowdown in the fourth quarter (+0.1%) compared to the previous three months, caught up by inflation which affects households in the portfolio and shows no respite at the start of 2023.

The Minister of the Economy Bruno Le Maire, who anticipated 2.7% annual growth, welcomed "sustained" growth in 2022 which "testifies to the strong rebound of our economy after the Covid shock and its resilience in the face of the energy crisis".

According to INSEE, the economy benefited above all last year from the rebound in activity recorded at the end of 2021 "at the end of the health crisis".

GDP of France © / AFP

Quarter after quarter, it was then "significantly less dynamic", even if the figures are better than expected.

The institute expected GDP to rise by 2.5% and contract by 0.2% in the fourth quarter.


The last three months of the year saw a sharp fall in household consumption (-0.9%), the traditional engine of growth halted by a sustained rise in prices.

Energy consumption also fell, due to a very mild autumn and energy sobriety efforts.

After a very slight decline to 5.9% in December, inflation accelerated to 6% in January year on year, still marked by double-digit surges for energy (13.2%) and food ( 16.3%), according to INSEE.

For households, the situation could have been even worse, according to economists, without the support measures deployed with billions of euros in the face of the energy crisis.

This lower household consumption weighed on the production of goods and services, which decelerated to 0.2% over the October-December period.

But manufacturing output fell by 0.5%, affected by the fall strikes in refineries.

In energy, it remained "low" due to maintenance of nuclear reactors.

Conversely, foreign trade contributed positively (0.5%) to growth, with imports falling more sharply than exports - even if a record trade deficit is expected for the whole of 2022.

Inflation in France © / AFP

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

"Facade resistance"

"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".

A bad omen for 2023, when inflation should continue to accelerate to a peak expected by INSEE around 7% at the start of the year, fueled by the end of a generalized rebate on fuel and a further increase in energy prices.

"This should push households to remain rather pessimistic," analyzes Stéphane Colliac, economist at BNP Paribas, for AFP.

This could possibly weigh on new business orders.

Activity will also begin to feel the full impact of the monetary tightening decided by the European Central Bank (ECB), which should decide on Thursday to raise its interest rates again.

According to an Opinionway survey conducted in January for the Chambers of Commerce and Industry (CCI France), 81% of the 618 business leaders surveyed do not plan to invest in 2023.

More pessimistic than the government (1%), the Banque de France predicts a slowdown with 0.3% growth in 2023 when the International Monetary Fund, which anticipates slightly better than expected global growth in the fall, foresees 0.7%.

“Nevertheless, escaping recession does not mean bouncing back strongly,” warns Charlotte de Montpellier, economist at ING.

© 2023 AFP