The institution forecasts growth of 2.3% over the year, a less optimistic calculation than that presented in March.
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More inflation and less growth. The Banque de France has darkened its forecast for the French economy in 2022, Tuesday, June 21. The institution now anticipates GDP growth of 2.3% over the year, whereas in mid-March it expected an increase comprised between 2.8% and 3.4%.
One of the main factors for this decline is “the current level of inflation which weighs on purchasing power”. Lhe Banque de France has also raised its forecasts for price increases, which should reach 5.6% over the year. After mainly affecting energy and food, it now also affects services.
According to the institution, this decline in expected growth is also explained by “the deterioration of the international economic situation as well as by the very uncertain geopolitical context”. The report points in particular to the role of the war in Ukraine and the confinements in China, which are putting pressure on the prices of raw materials and disrupting global supply chains.
In total, the war in Ukraine and its consequences could cause a loss of two points of GDP between 2022 and 2024 in France, as well as a rise of 3.5 points in inflation. If the most unfavorable scenario studied by the Banque de France were to come true, growth in 2022 could even reach only 1.5%, and inflation 6.1%.