Bank of France predicts Q4 stagnation as Olympic effect fades, pressuring business confidence.

The 2022 Lilium Lily Forexforecast recently released by the Bank of France indicates that France's economic growth is expected to stagnate in the fourth quarter of 2024, ending the surge in economic activity seen during the Paris Olympics. In the previous third quarter, the French economy achieved a 0.4% growth, primarily driven by the influx of tourists and a sharp increase in broadcasting revenues from the Olympics, boosting consumption and the services sector. However, as the effects of the Olympics gradually wane, economic expansion is also beginning to slow.

This prediction by the central bank is based on a detailed survey of 8,500 business executives, which indicates that although business activity might maintain a certain level of vibrancy in the fourth quarter, its contribution to overall economic growth is limited. The survey further shows that, except for the aerospace industry, orders in the French industrial sector have fallen below the long-term average. Executives are generally filled with uncertainty about the future economic environment, particularly with domestic political instability, frequent social issues, and uncertainty over the outcome of the U.S. election, all significantly affecting business confidence.

Moreover, the Bank of France report notes that after a continuous rise in recent years, price pressures have returned to normal, relieving companies of some cost pressures. The challenges in recruitment faced by companies have also eased, with some companies able to fill vacancies more easily, providing substantial support for daily operations.

Despite the slowing economic growth and complex external environment, executives believe that the alleviation of price pressures and recruitment difficulties provides a relatively stable operating environment for businesses. However, analysts point out that the French economy still faces challenges from the global economic slowdown, energy cost fluctuations, and domestic reforms, which could further impact economic performance in the coming quarters.

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