French Economy Rebounds: How Decline in Inflation Helped Boost GDP and Positive Outlook for 2024

France is experiencing a decline in inflation, which could pave the way for a restart of its economy. The provisional figures from INSEE show that inflation slowed to 2.2% over one year in April, compared to 2.3% in March and significantly lower than the 5.9% seen in April 2023. This decrease can be attributed to various factors, including a slowdown in food prices, tobacco prices, and a slight decrease in manufactured products prices, while energy prices accelerated.

Despite the rise in prices affecting household purchasing power during the first quarter, France’s GDP grew by 0.2% in the same period. Household consumption and business investments played a significant role in this growth, surpassing previous expectations and being welcomed by Bruno Le Maire as an indication of the strength of the French economy. The government’s strategy is paying off, with growth projections of 1% for 2024. However, analysts are more conservative with their estimates.

The French economy experienced an increase in economic activity during the first quarter due to acceleration in household consumption despite challenges such as the deficit exceeding targets and concerns about budget cuts impacting growth. It remains uncertain how the government’s plans to reduce deficit and make savings will affect this positive growth trajectory seen recently.