Marginal growth forecast in H1 2023: INSEE

10 Mar 2023

The French economy is on track for marginal growth in the first half of 2023, according to the INSEE statistics agency this week.

The agency added that whether pension reform strikes affect growth will depend on how long they continue.

As it stands, France’s economy is set to register quarter-on-quarter growth of 0.2% in Q1 and Q2, a rise from 0.1% growth in the fourth quarter of last year, said INSEE within its H1 2023 outlook.

According to the chief economist at the statistics agency, Julien Pouget, this indicated the French economy would need growth of around 0.4% in Q3 and Q4 this year to reach the 1% annual growth target forecast by the government in its budget.

Last December, INSEE forecast the economy would grow 0.1% in Q1, followed by 0.3% growth in Q2, Reuters reports.

Within its latest update, INSEE said the outlook also depended on how long strikes over pension reforms lasted. The third day of strike action took place on Tuesday within the energy sector, public transport, and certain schools since the government unveiled its pension reform plans on 10th January.

Pouget added that back in 1995, a series of strikes over a number of weeks had cost the French economy just 0.2 percentage points of growth, with the same amount “at most” in 2019 during strikes over pension reform.

In regard to inflation, INSEE said the annual rate was forecast to slow from 6.0% in January to 5.0% by June on easing energy price pressure following a 15% rise in regulated power prices last month.

In addition, food prices would fuel inflation pressure more than energy prices, the statistics agency added, keeping underlying inflation at or close to the 5.7% mark in the first half of this year.