Economists anticipate zero growth in France in 2023

Recession? Stagnating? Anemic growth? In recent days, economists have also been running their models in order to update their forecasts for the French economy in 2023. And they are more pessimistic than the executive, which is now counting on 1% growth next year and has noted its target for this year at 2.7%. According to them, economic activity should slow down in the coming months.

“The European and French economies will face a significant slowdown next year, and we cannot rule out a limited recession,” François Villeroy de Galhau, Governor of the Banque de France, said at the end of last week. The institution will unveil its new projections this Thursday.

So far, business activity has certainly held up well, driven by order books that are still well filled, and consumption has been supported by the excellent season achieved by restaurants and hotels.

New deal

But summer has reshuffled the cards. The new outbreak of fever on the prices of gas and electricity linked to the war in Ukraine now raises fears of a slowdown in industrial production. Some companies have already downsized. Power rations are now on the table in case Russian deliveries stop. Faced with galloping inflation in the euro zone, the European Central Bank (ECB) has for its part undertaken to amplify the increase in its key rates, suggesting a series of new increases in the coming months.

“All the economic signals are pointing in the direction of a weakening of activity”, observes Bruno Cavalier, chief economist of the bank Oddo BHF who anticipates “a stagnation” of activity in 2023. “Growth will be almost zero l next year”, abounds Charles-Henri Colombier, director of the economic situation of the Rexecode institute. By then, the French economy will have gone through a technical recession in the last quarter of 2022 and the first of next year, according to the two experts.

“Risks at their highest this winter”

“Winter promises to be the period when the risks will be at their highest,” explains Bruno Cavalier. Between rising energy bills, threats to supplies and rising interest rates, “companies are going to be very reluctant to spend over the next few quarters,” he says. Investment will be strongly affected.

As for household consumption, the main driver of the French economy, already at half mast since the start of the year, it risks being further weakened by the implementation of a tariff shield on gas and electricity. less generous from 1^er January 2023. Faced with the increase in their energy bill, the French will have less money to spend on other items. The rise in interest rates is also likely to slow down their real estate investments.

“At the same time, global demand will become less favourable,” stresses Charles-Henri Colombier. Among other things, the probable entry into recession of Germany, France’s largest trading partner, should have negative effects on French exports.

Recession in sight according to Barclays

More pessimistic than his colleagues, Patrick Artus, economic advisor to Natixis, believes that a recession in France is possible next year. “The scenario for the French economy in 2023 will depend on two factors: the number of companies that will stop producing due to high energy prices and the action of the ECB,” he explains. Depending on the magnitude of the interest rate hikes it will undertake to curb inflation, the French economy will be growing “epsilonesque” but positive in 2023 or not.

Barclays Bank, for its part, has decided: in its latest forecasts published at the start of the week, it anticipates a decline in France’s GDP of 0.7% next year (and 1.5% for Germany ). Investment should fall by 2% and consumption by 0.3%, resulting in a rise in the unemployment rate from 7.3% to 7.7%.