The French economy is expected to grow moderately in the fourth quarter

French GDP should progress moderately in the fourth quarter, the Banque de France estimated on Monday, without quantifying this development, and highlighting a very uncertain situation and a lack of visibility as to the impact of social mobilizations. It also announced that it was revising downwards its growth forecast for gross domestic product (GDP) in the third quarter, now counting on a decline of 0.1%, compared to +0.1% according to a previous estimate at the beginning of October, in the wake of the latest figures from INSEE which had surprised most forecasters.

According to the monthly economic survey of the Banque de France, conducted among a sample of 8,500 business leaders between October 28 and November 4, activity progressed in October in industry and commercial services, and changed little in construction. The data was collected before global stock markets took a hit, particularly AI-related stocks, amid investor fears following the Democrats' landslide victory in the midterm elections. According to data from the Banque de France, the uncertainty indicator constructed on the basis of responses from business leaders remains stable between September and October in industry and services, but increases significantly in the construction sector.

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“Increased wait-and-see”

In detail, the rise in fuel prices is one of the main reasons for uncertainty for the business leaders interviewed who also express fears regarding the political and budgetary situations, while the 2027 draft budget was sharply rejected in the National Assembly last week. This climate reflects an “increased wait-and-see attitude among all of their clients, households, other businesses and public authorities,” explained Yannick Kalantzis, deputy director general of statistics at the Banque de France during a press briefing. Concretely, this translates into “project postponements” and “reduced visibility” regarding activity in the coming months, he continued.

In November, industrial activity would be driven upwards by aeronautics, computer, electronic and optical equipment, as well as the production of electrical equipment. On the other hand, the Banque de France anticipates a decline in activity in automobile repair and accommodation. In this last sector, “we have mentions of cancellation of room reservations (in city centers, Editor's note) for the month of November in connection with social movements”, developed Yannick Kalantzis.