PARIS, March 20 (Reuters) - French economic growth is
proving to be stronger and inflation weaker than expected for
this year as Europe's energy price shock fades, the French
central bank said on Monday.
The euro zone's second-biggest economy is on course for 0.6%
growth this year, the Bank of France said in its quaterly
outlook, raising its forecast from 0.3% in December.
Despite the upgrade, the forecast means it will still be a
stretch for growth to reach the 1% target on which the
government has based its 2023 budget.
Meanwhile, inflation, calculated using an EU-harmonised
basket of goods and services, is now expected to average 5.4%
this year, down from an estimate of 6.0% in December, due to a
fall in commodities prices since then.
Inflation is expected to ease especially from the second
half of the year, after 15% increases early in 2023 in regulated
gas and power prices and following a 10% increase in negotiated
prices between big food retailers and their suppliers from the
start of March.
However, the central bank said its outlook had been
finalised in early March and was thus subject to heightened
uncertainties due to financial market tensions in recent days.
Looking further out, the central bank forecast the economy
would pick up steam as the drag from the energy crisis wore off,
with growth expected to reach 1.2% in 2024 and 1.7% in 2025.
Meanwhile, inflation would keep heading lower, averaging
2.4% in 2024 and 1.9% in 2025, falling in line with the European
Central Bank's 2% target for the broader 20-nation euro zone.
In the labour market, unemployment was forecast to rise from
7.5% this year to 8.1% in both 2024 and 2025 as a delayed effect
of the slower growth this year and productivity gains in
companies.
(Reporting by Leigh Thomas
Editing by Mark Potter)
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