France – 2022-2023 Scenario: recovery under pressure

France – 2022-2023 Scenario: recovery under pressure
  • Summary
  • Recent trends in activity
  • Our scenario for 2022-2023
  • Focus – Conflict in Ukraine: the impact on trade and energy dependence
  • Focus – Inflation increases further, driven by energy

In summary

After a record 8% contraction in 2020, French GDP recovered substantially in 2021, rising 7%. But the return of inflation stemming from the sudden resumption of economic activity in Western countries in second-half 2021 undermined household purchasing power despite strong labour-market momentum throughout the year. These inflationary pressures have heightened in recent months with Russia's invasion of Ukraine.

France – 2022-2023 Scenario: recovery under pressure

Inflation is the main shadow lurking over a recovery in economic activity. High already at the beginning of 2022, inflation is expected to peak in the third quarter if energy prices stabilise at current levels before sliding at the end of the year and in 2023. Household purchasing power will contract in 2022 on rising prices. This will weigh on demand despite France’s “tariff shield”, costing some €30 billion in public finances.

Pierre BENADJAOUD, Economiste