The French economy continued to grow at the end of 2022 and should avoid a contraction in the first weeks of the year despite headwinds from surging energy prices, a Bank of France survey showed.
(Bloomberg) — The French economy continued to grow at the end of 2022 and should avoid a contraction in the first weeks of the year despite headwinds from surging energy prices, a Bank of France survey showed.
According to the monthly poll of about 8,500 firms, activity advanced more than expected in the country’s main business sectors in December, bringing economic growth for the final quarter to around 0.1%. For January, company chiefs expect the expansion to continue in industry and services, and stabilize in construction.
Supply-side difficulties also decreased in industry, and especially in construction, the institution said in a statement on Wednesday.
“Activity in France is resisting rather better than predicted,” Bank of France Governor Francois Villeroy de Galhau said in an interview on Radio Classique. “It’s slowing. We have slightly positive growth. But overall, it’s holding up.”
He said the country will avoid a “hard landing” or tough recession as had been feared back in September.
“The real health of our economy is a bit better than our collective morale,” Villeroy added.
The report on the euro area’s second-largest economy adds to indications that 2023 may not turn out as bad as expected. On Tuesday, economists at Goldman Sachs dropped their forecast for a recession in the currency bloc as the economy proved more resilient at the end of 2022 and natural gas prices fell sharply.
The Bank of France said its monthly indicator of uncertainty also eased slightly in December and the cash positions of businesses stabilized. Business leaders’ assessments of the energy crisis also showed signs of stability.
(Updates with comments from Bank of France governor starting in fourth paragraph)
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