A sluggish end to the year
Overall, these indicators suggest that the economic outlook remains strongly impacted by rising prices and slowing global demand. In the services sector, activity remains solid thanks to the end of health restrictions, and in particular to the very good tourist season expected for this summer. This should boost economic activity in the second and third quarters. At the same time, the outlook for services is worsening due to the inflationary environment that is depressing real household incomes, and the decline in consumer confidence. The current rebound in services looks set to end, probably by the end of the summer. In the industrial sector, companies are still struggling with supply and recruitment difficulties, which are limiting production for 72% of them. This implies that it will take time to clear the backlogs in production lines, which could continue to have a positive effect on activity. In addition, the activity forecast from industrial companies is falling sharply, which means that there is little impetus for production in the coming months beyond clearing the backlogs. Indeed, PMI surveys indicate that purchasing activity has recorded its first decline since November 2020, with companies now holding sufficient stocks to meet demand. This implies that inventories are likely to lead to a slowdown in activity.
For the growth outlook, all this implies that we no longer expect a rebound in French economic activity in the second half of the year. After the contraction in the first quarter and a probable stagnation in the second, the third quarter could be the most dynamic of the year, but the fourth quarter is likely to see a contraction again, due to high prices and the marked slowdown in global growth. We expect GDP growth of 2.1% in 2022 and 0.9% in 2023.
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