The OECD revised its French growth forecast for 2023 upwards on Tuesday to 1%, thanks to a vigorous second quarter, but was more cautious for 2024 with 1.2% expected against 1.3% in from its June forecast. The forecast from the Organization for Economic Co-operation and Development published in its quarterly forecasts for global growth and inflation thus aligns with that of the French government for this year.
The OECD forecast 0.8% growth in France so far for 2023. Already on Monday, the Banque de France said it was more optimistic than before for the French economy in 2023, anticipating 0.9% growth against 0.7% so far, thanks to dynamic exports in the spring, and after growth of 2.5% last year. This forecast from the Bank of France for 2023 is the same as that of INSEE (National Institute of Statistics and Economic Studies) published at the beginning of September, which had also been revised upwards.
France would fare well this year compared to Germany, a heavyweight in the euro zone which should end up in recession this year, according to most forecasts, including those published by the OECD on Tuesday. The International Organization based in Paris, on the other hand, revised its growth forecast for 2024 in France slightly downwards (1.2% expected compared to 1.3% previously). The fault, according to the OECD, in particular is less vigorous European and global growth and interest rate increases by central banks aimed at curbing inflation, like that announced last week by the European Central Bank. (ECB). For the euro zone, the OECD forecasts growth of 1.1% in 2024, down 0.4 points compared to its June forecasts, mainly weighed down by Germany.
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Raising interest rates across the world to fight inflation is “necessary”, OECD chief economist Clare Lombardelli said on Tuesday, although it is “painful”. “We are all seeing that rising rates are making their way through our economies. It is necessary to reduce inflation, but painful,” said Clare Lombardelli during a press conference.
Inflation in France should begin to gradually decline, the international organization also predicts, with 5.8% expected this year, and 2.9% next year. Ditto in the euro zone with 5.5% this year and 3% next year, which could encourage the ECB to adopt a less restrictive monetary policy.