French architecture in France

France Economic Forecast

France Economic Outlook

GDP growth softened for a second successive time in quarter-on-quarter terms in Q4. The weaker expansion was driven by a contraction in private consumption. Moreover, fixed investment and export growth declined. That said, growth in public spending more than doubled. In 2023, the economy should slow further and remain flat in Q1. Increased inflation in January and February, along with downbeat consumer confidence in the quarter compared to Q4, suggests private spending is likely to decline in the quarter. In addition, higher interest rates are dampening fixed investment, notably in the construction sector, while industrial production contracted in January. Meanwhile, ongoing strikes against the adopted pension reform could slightly dent output in March. That said, the PMI rose in the quarter through March amid increasing new orders, with the latest print coming in at its highest level since May 2022.

France Inflation

Harmonized inflation rose to 7.3% in February (January: 7.0%) due to stronger food and housing price pressures. In 2023, inflation should ease but at a softer rate than in neighboring countries: The phasing-out of government subsidies mean high energy costs will linger. Factors to watch include commodity price swings and changes to government subsidies.

France Economic Data

2017 2018 2019 2020 2021
Population (million) 64.6 64.8 65.1 65.3 65.4
GDP (EUR bn) 2 2 2 2 2
GDP per capita (EUR) 35 36 37 35 38
Economic Growth (Nominal GDP, ann. var. %) 3.0 2.8 3.2 -5.3 8.2
Economic Growth (GDP, ann. var. %) 2.4 1.8 1.9 -7.9 6.8
Domestic Demand (ann. var. %) 2.5 1.4 2.1 -6.7 6.6
Private Consumption (ann. var. %) 1.7 1.0 1.8 -6.8 5.2
Government Consumption (ann. var. %) 1.4 0.8 1.0 -4.0 6.4
Fixed Investment (ann. var. %) 5.0 3.2 4.1 -8.4 11.4
Exports (G&S, ann. var. %) 4.6 4.5 1.6 -17.0 8.6
Imports (G&S, ann. var. %) 4.7 3.1 2.3 -13.0 7.8
Industrial Production (ann. var. %) 2.2 0.7 0.6 -10.7 5.7
Retail Sales (ann. var. %) 3.6 2.9 2.7 -2.3 10.3
Disposable Income (ann. var. %) 2.6 3.1 3.4 1.1 4.0
Unemployment (% of active population, eop) 9.0 8.8 8.2 7.9 7.4
Unemployment (% of active population, aop) 9.4 9.0 8.4 8.0 7.9
Fiscal Balance (% of GDP) -3.0 -2.3 -3.1 -9.0 -6.5
Public Debt (% of GDP) 98.1 97.8 97.4 115.0 112.8
Inflation (CPI, ann. var. %, eop) 1.2 1.6 1.5 0.0 2.8
Inflation (HICP, ann. var. %, eop) 1.2 1.9 1.6 0.0 3.4
Inflation (HICP, ann. var. %, aop) 1.2 2.1 1.3 0.5 2.1
Inflation (Core, ann. var. %, aop) 0.4 0.8 0.8 0.6 1.1
Inflation (PPI, ann. var. %, aop) 2.4 2.7 0.4 -2.2 9.3
ECB Refinancing Rate (%, eop) 0.00 0.00 0.00 0.00 0.00
3-Month EURIBOR (%, eop) -0.33 -0.31 -0.38 -0.55 -0.57
10-Year Bond Yield (%, eop) 0.80 0.71 0.11 -0.36 0.20
Stock Market (var. of CAC 40 %) 9.3 -11.0 26.4 -7.1 28.9
Exchange Rate (USD per EUR, eop) 1.20 1.14 1.12 1.22 1.14
Exchange Rate (USD per EUR, aop) 1.13 1.18 1.12 1.14 1.18
Current Account Balance (EUR bn) -17.6 -19.6 12.5 -41.5 9.0
Current Account Balance (% of GDP) -0.8 -0.8 0.5 -1.8 0.4
Merchandise Trade Balance (EUR bn) -46.1 -51.0 -47.0 -59.1 -67.4
Foreign Direct Investment (EUR bn) 20.7 36.6 25.3 4.0 12.5

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