Tuesday, September 26, 2023
HomeEconomyFrance cuts 2023 growth outlook to 1%, but leaves deficit target unchanged

France cuts 2023 growth outlook to 1%, but leaves deficit target unchanged

PARIS (Reuters) – French Finance Minister Bruno Le Maire said the French government is downgrading the country’s 2023 economic growth outlook, but believes no It is necessary to revise its budget deficit target accordingly.

Growth in the euro zone’s second-largest economy is now expected to slow from an estimated 2.5 percent this year to 1 percent next year, down from 1.4 percent previously, Le Maire told reporters, outlining Key forecasts underpinning the 2023 budget bill due later this month.

While slightly bleak, France’s outlook contrasts with that of Germany, where two of Germany’s leading economic institutions last week forecast that Europe’s largest economy will contract next year.

“We maintain a positive growth forecast, but we are adjusting it to (reflect) international realities, energy market tensions and difficulties with our trading partners,” Le Maire said.

Despite a weak outlook, he said he abandoned France’s plan to reduce its public sector deficit from an estimated 5% of economic output this year to 2027 less than 3% , this is not an option.

The government will therefore stick to its plan for a deficit of 5% of GDP next year, in anticipation of higher corporate tax revenues and the removal of taxes on corporate turnover in two years instead of one.

Le Maire said he was also counting on lawmakers to come up with plans to rein in spending in France, which ranks among the most industrialized nations.

Inflation will pick up in December, January as the government phase out motor fuel rebates and allow a “controlled” increase in electricity and petrol caps at the beginning of the year, he said and remained high in February.

Le Maire said inflation is expected to ease to 2023 an average of 4.2 percent from 5.3 percent this year.



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