The French economy is facing an extremely difficult period, according to the Bank of France. Several parameters: French exports, inflation and interest rates, have led bank experts to believe that the French economy will only grow by 0.3% in 2023, despite previous expectations of 1% growth. This subdued growth could lead to problems for government budgets.
“After showing good resilience during most of 2022, activity will go through two distinct phases: a sharp slowdown from this winter, followed by an easing of inflation tensions and a gradual recovery of economic growth in 2024 and 2025,” the Bank of France stated.
The Bank of France made this assessment following the publication of a report by the statistics agency INSEE, which in particular pointed to the following:
France's economy will contract 0.2% in the final three months from the previous quarter.
A series of refinery strikes in October cut car fuel supplies while maintenance issues at France's ageing fleet of 56 nuclear reactors reduced their power output to a 30-year low.
The loss of nuclear output would cut French economic growth by 0.4% this year.
Next year, France would return to growth in the first quarter with a rate of 0.1% followed by 0.3% in the second quarter.
France's inflation will continue rising from 6.2% in November to peak in January and February at a 38-year high of 7%.
Amid the gloomy forecasts, the French Finance Ministry insists that the country's economy will still show a growth rate of 1% despite all the negative trends.
On February 24, Russia began a special military operation in Ukraine.
The West responded by imposing harsh sanctions against Russia. The European countries have already approved nine packages of sanctions against Moscow, including those aimed at gradually phasing out Russian oil and gas. Those decisions of western countries resulted into massive oil, gas and consequently inflation crises in Europe.