PARIS — France’s economy is set to eke out weak growth in the first half of this year as inflation and strikes weigh on business activity while energy price pressures ease, the national statistics agency said on Wednesday.
The euro zone’s second-biggest economy is on course to grow only 0.1% in the first three months of the year from the previous quarter and expand 0.2% in the second quarter, INSEE said in its economic outlook.
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INSEE had forecast in February that the economy would grow 0.2% in both the first and second quarters after having expanded 0.1% in the final three months of last year.
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INSEE chief economist Julien Pouget said that its latest forecasts meant the economy would need growth of about 0.5% in the two final quarters of 2023 to achieve the 1% annual growth that the government has forecast in its 2023 budget.
In the first quarter, strikes over government plans to raise the retirement age by two years would weigh on activity in the energy and transport sectors, INSEE said.
Meanwhile, consumer spending would recover in the first and second quarters as lower energy prices gave households some relief although that would in part be offset by higher food prices, INSEE said.
It forecast overall inflation would ease from 6.0% in January to 5.4% in June as energy price pressure subsided.
However, underlying inflation, which excludes volatile items like energy and fresh food prices, was seen rising from 5.6% in January to 6.4% in June largely due to rising processed food and services prices. (Reporting by Leigh Thomas; Editing by Toby Chopra)
