“The recovery is slow to come”: French growth should stagnate in the first quarter of 2024 due to “punctual” stoppages in industrial production, and only restart in the second quarter, the National Institute of Statistics estimated on Tuesday. economic studies (INSEE).
Overall, the Institute estimates in its latest economic report that growth will be "limited to the first half", and even "stalled" (+ 0.0%) in the first quarter - less than what it had initially forecast (+0.2%).
“The first data available for January 2024 (notably industrial production and household consumption) are poorly oriented and growth would be zero in the first quarter, penalized by occasional stoppages in industry, particularly in refining and automobiles,” explains INSEE.
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In the first quarter of 2024, GDP would be at a standstill (+0.0% growth), then in the second quarter, activity would rebound (+0.3%).
In total, the mid-year growth gain for 2024 would be modest, at +0.5%
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To this “one-off” surprise were added “new data concerning housing starts that were a little more degraded than expected,” explained Thursday at a press conference Dorian Roucher, head of the department of conjuncture.
1% growth in 2024: an objective considered “ambitious”
Overall, “the improvement in consumption would only be reflected in growth in the spring”.
Growth would in fact “rebound” in the second quarter, to +0.3% (compared to +0.2% initially), “under the effect of significant aeronautical and naval deliveries” and thanks to a release of the “brakes” of the beginning of the year.
The government is counting on 1% growth in 2024 to meet its budget and its deficit reduction plan, an ambitious objective given the weak forecasts for the start of the year.
“Accounting, we would need to have 0.7% growth in the third and fourth quarter to obtain 1% growth over the year,” explained Dorian Roucher.
Also read “The fog is starting to clear”: the Banque de France expects growth to resume until 2026
“Restart through consumption”
These gains in purchasing power “would encourage a relative rebound in household consumption” (+ 0.3% per quarter), particularly with regard to accommodation and catering expenses and food purchases, which “would begin timidly to to get back on track” after “two years of unprecedented decline”.
The “general message” is that “there is a restart through consumption rather than through investment, which remains depressed” (-1.0% in the first quarter, -0.5% in the second ), summarized the head of the economic department.
Disinflation despite rising energy prices
Good news, however, on the price side: “in France, the inflationary episode is fading,” says INSEE.
“The consumer price index fell to +2.9% over one year in February 2024 (according to the provisional estimate) and this decline should continue at +2.6% in June”, therefore approaching the target of 2% inflation advocated by the European Central Bank (ECB).
Core inflation, which excludes volatile food and energy prices, is also expected to fall by June, to +2.1% year-on-year.
“The composition of inflation has, however, changed significantly,” says INSEE: “food and manufactured product prices are tending to stabilize and inflation is now mainly driven by service prices,” where “companies pass on to their customers the past increase in their salary costs.
Energy prices are also increasing “strongly”, “under the effect of the partial reinstatement of taxes on electricity”, even if this is partly “counterbalanced by the fall in gas prices”.
INSEE thus forecasts that energy inflation will increase from +4.4% over one year in February to +7.8% in June.
Despite this, “disinflation is confirmed”, according to INSEE.
Thanks to this slowdown in inflation, the revaluation of social benefits and an increase in wages greater than the rise in prices, INSEE expects an increase in purchasing power of around 0.8% mi -2024.
Unemployment up “slightly”
The unemployment rate should record a “slight increase” of 0.1 point in the first quarter of 2024, to 7.6% of the active population - its highest level since the third quarter of 2021 -, then would remain at this level in the second quarter.
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The unemployment rate would increase by 0.1 point in the first quarter of 2024, to 7.6% of the active population, then remain at this level in the second quarter of 2024.
It would thus be at its highest level since the third quarter of 2021
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The reason: the active population should continue to increase by around 40,000 additional workers per quarter, "in particular under the effect of the pension reform", when employment would grow "half as fast", explains the institute .