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Bank of France sees slowdown next year, recession risk

PARIS (Reuters) – France’s economy will slow sharply next year in the face of Europe’s energy crisis, with a “limited and temporary” recession possible in a worst-case scenario, the Bank of France said on Thursday.

The euro zone’s second-largest economy is on track for 2.6 percent growth this year, but growth at the Bank of France 2023 will slow to 0.5 percent in its Reference scenario based on recent oil and gas futures prices.

But high uncertainty in energy supplies and prices and an expected slowdown this winter mean the central bank is more willing to draw a range for the economy It said in its quarterly outlook that growth rates for next year will be in Between +0.8% and -0.5%.

,” Central Bank Governor Francois Villeroy de Galhau said in an interview with La Croix newspaper.

In its last forecast in June, the central bank projected economic growth of 2.3% th one year and 1.2% next year. The Ministry of Finance meanwhile forecast growth of 2.7% this week 2022, 2023 Up 1%.

Further Outlook The central bank forecast Thursday that economic growth will recover as energy market tensions recede, in

reached 1.8%.

The central bank’s average inflation rate this year reached 5.8%, in 2023 depending on the energy market , before falling back to 2.7% in 2024. The ECB’s medium-term inflation target is 2%.

“We are firmly committed to inflation over the next two to three years rate fell back to 2 percent,” said Villeroy.

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