INSEE expects a timid restart of French growth in early 2024

Economic activity is expected to grow by 0.2% in the first and second quarters. This can be explained in particular by a resurgence in consumption, encouraged by the slowdown in inflation.

French economic activity should grow timidly by 0.2% during each of the first two quarters of 2024, according to the National Institute of Statistics and Economic Studies (Insee), in an economic update published Wednesday February 7. This slight increase in gross domestic product (GDP) in the first half, if confirmed, would follow the inertia observed in the second half of 2023, in a context of high rates and strong geopolitical tensions.

“After a half-year of stagnation in activity, the horizon should clear up a little at the start of 2024. The latest indicators indeed confirm the diagnosis (…) of a very moderate recovery.”

Dorian Roucher, head of the economic situation department at INSEE

in a point of conjuncture

Household consumption should rebound and constitute the main driver of domestic demand, encouraged by the slowdown in inflation and the increase in wages and social benefits. The harsh temperatures of early January would increase energy consumption. “Disinflation appears to be on track”, assured Clément Bortoli, head of the economic summary division. The price increase would reach 2.6% in June over one year, compared to around 6% at the start of 2023, a level not seen in almost four decades.

No improvement for investment

Fueled by wage increases, services should take precedence over food as the main contributors to the price increase (+3% in June year-on-year). For food, the rise in prices would slow to 1.5% by this time, compared to 5.7% in January and a peak of almost 16% in spring 2023. It would be 7.5% for energy, driven in particular by the reestablishment of taxes on electricity.

No improvement, however, for household investments – especially in the construction of new housing – and businesses, which would suffer from the monetary tightening carried out by the European Central Bank (ECB). The latter, which remains cautious in the face of inflation, did not provide any sign in January suggesting an imminent easing of its monetary policy.

INSEE, for the moment, has not provided a forecast for the whole of 2024. While the Banque de France anticipates growth of 0.9%, the government is counting on 1.4%.