⚠️Automatic translation pending review by an economist.
On Monday, September 24, 2018, the government published the draft finance bill (PLF) for 2019, including its growth and inflation projectionsfor France. Detailed forecasts will only be released with the economic, social, and financial report (RESF).
- GDP growth in France is expected to be 1.7% in 2018 and 2019.This is unchanged from the 2018 PLF/2019-2022 PLPFP, but has been revised down significantly since the April 2018 Stability Program (Pstab) (-0.3 pp in 2018 and -0.2 pp in 2019). In the government’s scenario, the contribution of domestic demand excluding inventories to growth would be 1.6 pp in 2018 and 2019. The contribution of foreign trade would be slightly positive (0.1 pp) in both years.
- Total inflation (as measured by the Consumer Price Index – CPI) is expected to be 1.8% in 2018 and 1.4% in 2019.Core inflation is expected to be 0.9% in 2018 and 1.1% in 2019. The government’s inflation forecast for 2018 and 2019 has been revised upward compared to the 2018 draft budget and the April 2018 Pstab (+0.4 pp in 2018 and +0.2 pp in 2019).
- In its opinionpublished on September 24, 2018, the High Council of Public Finances (HCFP) described the growth projection for 2018 as « likely » and that for 2019 as « plausible. » The HCFP considers the government’s inflation forecast to be « reasonable. »
- For 2018, the government’s growth forecast is identical to that ofINSEE andthe European Commission, but higher than that of the Banque de France. For 2019, the government’s growth forecast is lower than that of the European Commission, but higher than that of the Banque de France. Comparing inflation forecasts is tricky because of differences in the scope (CPI/HICP).
- The government’s forecast for household purchasing power (1.6%) for 2018 is significantly more dynamic than those of INSEE (1.0%) and the Banque de France (1.0%)and in light of the growth achieved[1] at the end ofthe second quarter of 2018 (0.6%). However, the three institutions specify that household purchasing power would benefit from the effects of reductions in compulsory levies (reduction in housing tax and reductions in payroll contributions) from the end of 2018.
Graphs: Comparison of forecasts for 2018 and 2019
Publication dates
Banque de France: September projections, September 14, 2018
INSEE: June Economic Report, June 19, 2018
Government: Draft Finance Bill for 2019, 24/09/2018
European Commission: Summer interim projections, July 12, 2018
*HICP for the Banque de France and the European Commission, CPI for the Government and INSEE
[1]The growth target corresponds to the average growth rate that would be achieved over the year if the aggregate did not increase during the rest of the year.
