French finance minister sticks to 1% growth outlook despite risks
French Finance Minister Bruno Le Maire said on Wednesday he was sticking to a forecast of 1% economic growth this year despite numerous risks to the outlook while a fall in inflation this month offered consumers some relief.
The European Commission and the International Monetary Fund are more cautious about the outlook, both forecasting that the French economy is headed for growth this year of 0.7%.
“I maintain the forecast for economic growth of 1% though I am aware of the risks weighing on growth,” Le Maire told France Inter radio.
The INSEE official statistics agency said as Le Maire spoke that the euro zone’s second-biggest economy grew 0.2% in the first quarter, confirming a previous estimate.
Consumer spending, the traditional engine of French growth, barely remained positive at 0.1% as households contended with high inflation, increasingly driven over the quarter by rising food prices.
While a recession in France’s biggest trading partner Germany and the impact of the war in Ukraine remained serious risks, Le Maire said inflation was beginning to fall.
Offering some relief to consumers, French inflation eased more than expected in May to 6.0% from 6.9% the previous month, hitting the lowest rate in a year as price and food inflation in particular cooled in the month, INSEE said in a separate report.
Though welcome, the fall is too little too late for many consumers, who have been reining in spending, a separate April consumer spending report from INSEE showed.
Spending dropped 1.0% in April from March, falling for the third month in a row and missing economists’ average expectation in a Reuters poll for an increase of 0.3%.