French central bank sees slowdown next year, risk of recession
PARIS (Reuters) – The French economic system will gradual sharply subsequent 12 months within the face of Europe’s vitality disaster, with a threat of a “restricted and non permanent” recession within the worst-case situation, the central financial institution stated on Thursday.
The euro zone’s second-biggest economic system is on the right track for an enlargement this 12 months of two.6% however development will gradual to 0.5% in 2023, the Financial institution of France stated, underneath its reference situation based mostly on current oil and fuel futures costs.
However the excessive uncertainty round vitality provides and costs and an anticipated slowdown this winter meant the central financial institution most popular to flag a variety for financial development subsequent 12 months of between +0.8% and -0.5%, it stated in its quarterly outlook.
“If a recession should occur, it is going to be restricted and non permanent with a pointy rebound in 2024,” central financial institution governor Francois Villeroy de Galhau stated in an interview with La Croix newspaper.
In its final forecasts in June, the central financial institution had pencilled in development of two.3% this 12 months and 1.2% subsequent 12 months. The finance ministry in the meantime forecast 2022 development this week of two.7%, and of 1% in 2023.
Trying additional out, the central financial institution forecast on Thursday that development would recuperate as vitality market tensions subside, to succeed in 1.8% in 2024.
The central financial institution noticed inflation reaching 5.8% on common this 12 months and in a variety between 4.2% and 6.9% in 2023 relying on vitality markets, earlier than easing again to 2.7% in 2024. The European Central financial institution targets medium-term inflation of two%.
“We’re firmly dedicated to bringing inflation again down in direction of 2% within the subsequent two-to-three years,” Villeroy stated.
(Reporting by Leigh Thomas; Modifying by Catherine Evans)
