GDP growth forecasts revised upwards

The Banque de France is optimistic. Despite the social unrest that impacted activity in March, economists are expecting French GDP to grow by +0.2% in the 1st quarter, up 0.1 points on the last forecast in January.

March: increased activity in industry, services and construction

The monthly business survey published on April 11th by the Banque de France shows an increase in activity in industry, market services and construction.

Among the 8,500 companies or establishments surveyed between March 29 and April 5, most are reporting a clear improvement in production in the IT, electronics and optical products, automotive, aeronautics, machinery and equipment sectors. Inventories changed little in March, but remain above their long-term average.

The market services sector, particularly car rental and business services, is growing at a steady pace. Only transport and warehousing services saw a contraction in activity. This was the third consecutive month of decline, mainly due to the impact of industrial action.

In the building sector, business is improving, driven by the dynamism of the finishing sector.


April: growth in all sectors

Questioned as part of the survey, managers anticipate an increase in all industrial sectors for April.

More specifically, in the services sector, they are forecasting an increase in activity in all sectors except advertising and transport and warehousing services. In the building sector, however, they believe that activity could fall back in both the structural and finishing trades , due to the slowdown in single-family home construction.

Growth forecast revised upwards for 2023

In light of the feedback received from business leaders, the Banque de France has revised its growth forecast upwards for the 1st quarter of 2023. Whereas it was anticipating GDP growth of 0.1%, it is now betting on an increase of 0.2%.

This revision is attributed to " buoyant activity in industry and market services in the first two months of the year", the survey points out.

In fact, January and February were marked by a sharp rise in production indices, as shown by the figures published by INSEE.

In March, the central bank had already highlighted renewed optimism for the French economy, doubling its annual GDP growth forecast to 0.6%. Inflation should be lower than expected. It is expected to average 5.4%, and 4.3% excluding energy and food, over the full year 2023.