27 Jun 2022
France’s economy is forecast to maintain a steady growth rate for the remainder of this year, yet inflation in the country will edge up close to 7%, according to the INSEE statistics agency.
Following an economic contraction of 0.2% in Q1 compared to the previous quarter, the economy is forecast to grow 0.2% in Q2 and 0.3% in both Q3 and Q4, according to the national statistics agency’s economic outlook.
In regard to the year as a whole, the French economy – the second largest in the eurozone – is set to register growth of 2.3%, predominantly fuelled by consumer spending. In addition, services are reaping the benefits of a return to normality within the transport sector, Reuters reports.
In terms of inflation in France, the rate is forecast to rise over the summer season from 5.2% in May to steady at around 6.5% to 7% for the remainder of 2022, hitting levels not seen in the country in 38 years.
Nevertheless, the INSEE statistics agency went on to add that price pressures could move from energy, which up to now has fuelled the increase, to food and manufactured products, as well as services.
According to the statistics agency’s estimates, inflation would be two percentage points higher without measures undertaken by the government to curb price pressures. This includes a cap on gas and electricity pressures as well as a fuel price rebate.
In addition, this latest data shows the labour market will likely stay robust for the rest of this year, with 200,000 new jobs predicted to be created. This would lower the unemployment rate from 7.3% in Q1 to 7.0% by the end of 2022, which is the lowest point seen since the beginning of 1982.