French economic activity contracted by 0.1% in the third quarter compared to the previous three months, penalized by less sustained investments and household consumption than previously estimated, INSEE indicated on Thursday. The National Institute of Statistics lowered its first estimate, published at the end of October, of a modest increase of 0.1% in gross domestic product between July and September.
This means that if the evolution of GDP remains in negative territory in the fourth quarter, France will fall into recession, defined as two consecutive quarters of decline. Despite this slump, the Minister of the Economy, Bruno Le Maire, confirmed on France Inter France’s growth forecasts for 2023 (1%) and 2024 (1.4%). “Let us first emerge from the most serious economic crisis since 1929,” said the Minister of the Economy.
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In detail, in the third quarter, the growth in investments was revised down sharply, to 0.2% compared to 1% previously estimated. If business investments continued to hold up (0.5%), household investments fell into the red (-1.1%). Traditional pillar of the French economy, household consumption certainly rebounded by 0.6% compared to the second quarter, but a little less strongly than previously calculated (0.7%). Foreign trade also made a more negative contribution to the evolution of GDP (-0.4%), due to increased imports.
On the inflation side, the Minister of the Economy assured that “we will be below 4% by the end of 2023”. If INSEE records a slowdown of 3.4% over one year in November, Bruno Le Maire sought to reassure the French: “In 2024-2025, there will be much less inflation, with rates of interest stabilized.”
