Growth 2024: the Banque de France clearly more pessimistic than Bercy

While the Bercy ministers will present their budget on September 27, the Bank of France has just thrown a serious stone in their garden. The institution estimates that the gross domestic product (GDP) will increase by 0.9% in 2024 when Bercy has advanced the figure of 1.4%. “The upward revision of energy prices and especially that of the drop in global demand addressed to France” explain the lower performance in France. In hard euros, this difference of 0.5 points represents around 12.5 billion.

Enough to potentially raise the public deficit and debt forecasts, expected by Bercy, today, to 4.4% and 109.7% of GDP respectively. For 2025, the Banque de France also appears more cautious than the executive with an increase in activity of 1.3%, compared to 1.7%. According to the central bank, it is essentially “the unfavorable international environment” which will weigh on growth. Activity would in fact be mainly driven in 2024 and 2025 by household consumption and business investment.

Consumption in particular would start to rise again from 2024 due to the good performance of purchasing power: it would increase by 0.7%, after 0.6% in 2023. By this time, “employment would no longer support the increase in purchasing power, but nominal wages would increase faster than inflation,” notes the Banque de France.

Inflation, on the other hand, would continue its slow decline, from 5.8% in 2023 to 2.6% in 2024 then 2.1% in 2025, according to its projections. A trajectory very close to that advanced by Bercy. If this scenario is confirmed, France would gradually emerge from the inflationary crisis, at the cost of a slowdown in its activity, but avoiding going through a stage of recession.