France: growth to suffer “backlash” from Olympics in fourth quarter

Lucas/AFP

The Banque de France said on Tuesday that it expected gross domestic product to be “roughly unchanged” in the fourth quarter compared to the summer, due in particular to the “backlash” following the Olympic Games and Paralympics. 

Activity should record a “slightly positive progression” between October and December, but this increase would be offset by the “backlash” caused by the end of the Olympic Games, “estimated at -0.2 points of GDP”, the institution specified in its monthly economic survey, without quantifying the level of growth expected in the fourth quarter. 

The Olympic Games had fueled growth in the third quarter (+0.4%) by supporting the services sector. The activity had benefited in particular from ticket sales and sales of audiovisual broadcasting rights. 

For the whole of 2024, the Banque de France anticipates growth of 1.1%, like the government and the National Institute of Statistics (Insee), which expects zero growth during the last quarter. 

According to the approximately 8,500 companies surveyed between October 29 and November 6 as part of the business survey, activity increased in October in industry, supported by aeronautics and the food industry. 

On the other hand, the automobile sector continued to suffer, especially “the production of electric cars, which are suffering from Chinese competition and a drop in demand for these models”, the Banque de France stressed. 

Industrial order books are still considered “degraded”, except in aeronautics. 

In market services, activity slowed in October while in construction, structural work benefited from the resumption of projects postponed by the JO. 

In November, the Banque de France estimated that activity should change “little” in industry and services, and that it would decline in construction. 

It notes, however, that the uncertainty indicator, based on company comments, remains “relatively high across all sectors”, with companies mentioning “the domestic political situation and the impact of tax debates, as well as the international environment”, including the US elections that had not yet taken place at the time of the survey. 

Concerning prices, normalisation has been confirmed, including in services, and “inflation should therefore remain under control”, according to the French central bank. 

Recruitment difficulties continued to decline, with 31% of companies saying they were experiencing them in October compared to 35% in September. 

 

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