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The French economy at a standstill in the first quarter: inflation weighs on domestic demand

(AOF) – In the first quarter of 2022, French GDP remained stable against an increase of 0.8% in the fourth quarter, said INSEE. The consensus was 0.3% for GDP growth. This stagnation reflects the weakness of domestic demand: household consumption fell sharply (-1.3% after +0.6%), while investment slowed down slightly (+0.2% after +0.3%) . All in all, final domestic demand excluding inventories made a negative contribution of -0.6 points to GDP growth after a positive impact of 0.5 points in the previous quarter.

The contribution of foreign trade to GDP growth was slightly positive this quarter: +0.1 points, after being nil in the previous quarter.

Finally, the contribution of changes in inventories to the change in GDP is once again positive this quarter. It stands at +0.4 point after +0.3 point in the fourth quarter of 2021.

“The rising inflation at the start of the year and exacerbated from March by Russia’s invasion of Ukraine is weighing on household confidence and, consequently, on domestic demand”, explains Crédit Agricole . Its GDP growth forecast for 2022 is therefore subject to a downside risk linked to inflation which would remain high until the third quarter and which would contribute to the erosion of purchasing power, thus limiting the growth of household consumption.

ING France expects weak growth for the coming quarters, with a second quarter probably close to 0% quarter-on-quarter and the second half of the year posting quarterly growth rates of a maximum of 0.4%. “Ultimately, the French economy would grow by 2.7% over the year as a whole, a low figure if we consider the growth overhang at the end of 2021 (2.4%)”, concludes Charlotte de Montpellier, ING economist.


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