(Bloomberg) -- The French economy will exit a six-month stagnation with slight growth at the start of 2024, according to the Bank of France’s monthly business survey.
Activity levels advanced in services in January, but were little changed in industry. For February, business leaders in the central bank survey expect a pickup in industry and a smaller expansion in services.
Based on those results and other indicators, the institution estimates the economy will expand between 0.1% and 0.2% in the first quarter.
“There is a slow economic situation, but we will escape the bleak scenario that some feared,” Bank of France Governor Francois Villeroy de Galhau said in an interview with regional newspaper Ouest-France published on Thursday.
France showed greater resilience than other European economies last year, when households and firms struggled with an inflation surge that began in 2022. But the sluggishness at the start of 2024 suggests there will be no rapid recovery.
That is creating difficulties for President Emmanuel Macron as he is relying on a stronger rebound to repair public finances and boost the job market.
Still, the Bank of France survey indicated better news on inflation as fewer companies raised prices in January than at the same time in the previous two years.
Villeroy said that for consumers the disinflation trend has now spread to all outlays, although at a slightly slower pace in services than in goods. He repeated recent comments that the progress in tackling inflation should allow the European Central Bank to begin cutting rates at some point this year.
“We will cut rates when the inflation outlook is sufficiently anchored at around 2%,” he said. “We use our judgment, based on an array of data that also includes changes in economic activity.”
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