[PAGE_3]Overview[/PAGE_3]
[PAGE_4]Introduction[/PAGE_4]
[PAGE_7]Latest economic news[/PAGE_7]
[PAGE_9]Employment, productivity, wages[/PAGE_9]
[PAGE_11]Households[/PAGE_11]
[PAGE_13]Businesses[/PAGE_13]
[PAGE_15]International trade[/PAGE_15]
[PAGE_16]Public finances[/PAGE_16]
[PAGE_18]Risks[/PAGE_18]
[PAGE_19]Appendices[/PAGE_19]

Marianne PICARD

The disinflation process, already well under way, is expected to continue through end-2025. Having peaked year-on-year in March 2023 (at 15.9% in CPI terms), food inflation stood at 1.7% in March 2024 according to provisional results. Leading indicators on production and import prices suggest that this decline is likely to continue. Inflation in manufactured products has already run its course, nudging 0% year-on-year in March 2024 (at 0.1%) after also peaking in March 2023, at 4.8%. Nominal wages should continue to rise sharply and employment remain relatively resilient, as detailed above. These two factors together will bolster household purchasing power and thus household consumption, which will be the key driver of recovery and growth in 2024 and 2025.

Marianne
 
PICARD
Economist

Economic activity slowed significantly in France in 2023 on persistently high inflation and emphatic monetary tightening. The French economy grew 0.9% over the year (seasonal and working-day adjusted), after 2.5% in 2022, but avoided a recession. 

The economy is expected to recover in 2024, with annual growth stable at 0.9% but with higher quarterly growth than in 2023. Annual growth is expected to be adversely affected by sluggish activity in the second half of 2023, with a very low growth overhang for 2024 at the end of fourth-quarter 2023. The recovery will be driven by household consumption as disinflation continues, while investment will continue to be impacted by the past tightening of financial conditions. 

Growth is expected to increase to 1.3% in 2025, bolstered by persistent strong consumption momentum and the rebound in investment as monetary policy returns to normal. Annual average inflation is expected to fall sharply, to 2.5% in 2024 in CPI terms (after 4.9% in 2023) and 2.1% in 2025.