French central bank trims 2024 growth outlook
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If economic growth proves to be closer to the central bank’s estimate, the French government may have to scrape together extra Budget cuts during the course of 2024.
PHOTO: AFP
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PARIS – The French economy will grow marginally less than expected in 2024 on weaker consumer spending and investment, France’s central bank forecast on March 12, putting additional pressure on the strained public finances.
The euro zone’s second-biggest economy is set to grow 0.8 per cent in 2024, the Bank of France said in its quarterly outlook, revising down its estimate from 0.9 per cent in December.
In February, the French government lowered its 2024 growth forecast to 1 per cent from 1.4 per cent previously and announced €10 billion (S$14.6 billion) in emergency budget cuts to keep its deficit reduction plans on target.
If growth proves to be closer to the central bank’s estimate, the French government may have no choice but to scrape together extra budget cuts during the course of 2024.
The independent public audit office warned earlier on March 12 that the French government’s budget deficit target looked optimistic and urged it to come up with another round of savings.
Offering some relief, the central bank said the outlook for 2025 had improved, forecasting growth of 1.5 per cent, up from 1.3 per cent in December, with interest rate cuts boosting activity. In 2026, growth was seen at 1.7 per cent, up from 1.6 per cent in December.
The central bank also forecast inflation would average 2.5 per cent in 2024, nearing the European Central Bank’s 2 per cent target towards the end of 2024. Inflation was seen averaging 1.7 per cent in 2025 and 2026.
Drawing on its monthly business sentiment survey, the Bank of France said it expected quarterly growth of 0.2 per cent in the first quarter of 2024 after 0.1 per cent in the final three months of 2023. REUTERS
