French economy set to stall in Q4 ’24 – central bank

France’s economic growth is expected to stall in the fourth quarter of 2024, following a 0.4 per cent expansion in the third quarter driven by a summer surge in tourism for the Paris Olympics, the France’s central bank reported Tuesday.

The Banque de France estimates a 0.2 percentage point drag from the post-Olympic slowdown, leaving the economy flat for the quarter. However, political instability after Prime Minister Michel Barnier’s government collapsed over a budget dispute has heightened economic uncertainty.

A survey by the central bank revealed moderate growth in the services sector but contractions in industry and construction. Industrial order books hit their lowest since the COVID-19 crisis, and manufacturing capacity utilisation dipped to 74.7 per cent from 75.2 per cent in October.

Business sentiment is increasingly pessimistic, with uncertainty in industry and construction reaching a two-year high. Employers are adopting caution, curbing investments, reducing hiring, and tightening cash flow management, according to a separate IFOP survey.

Despite fears of recession voiced by French employers’ federation Medef, the central bank’s data suggests the economy has not yet contracted.

Attribution: Reuters

Subediting: M. S. Salama