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French central bank trims economic growth estimate

Published 10/10/2022, 02:29 AM
Updated 10/10/2022, 03:21 AM
© Reuters. FILE PHOTO: People walk past food shops on a street in Paris, France, June 10, 2022. REUTERS/Sarah Meyssonnier

PARIS (Reuters) - France's economy is likely to have grown by 0.25% in the third quarter from the previous three months, the country's central bank said on Monday, slightly downgrading a previous forecast of 0.3%, mainly owing to poor industrial activity.

"In an economic environment marked by the energy crisis and difficulties in supply and recruitment, activity continues to be resilient overall, but industry is more affected than other sectors", the Bank of France said.

Business activity in the country's struggling industrial sector was flat in September while the services sector grew further, the bank said in its monthly economic outlook based on a survey of business leaders.

As it had done last month, the bank said executives had reported increased uncertainty, mainly driven by worries over energy prices and power availability.

Companies facing the most difficulties are those with the highest energy needs, Bank of France Governor Francois Villeroy de Galhau told France Culture radio on Monday.

First indicators are pointing towards a slight overall uptrend in October, the central bank added, though the dominant services sector - the country's main economic driver - is likely to expand more slowly than in previous months.

The country's INSEE statistics body said in a separate survey last week that it expected 0.2% GDP growth for the third quarter and stagnation for the October-December period.

France, the euro zone's second-biggest economy, achieved 0.5% growth in the second quarter.

For the full year, the central bank has projected 2.6% growth, followed by a forecast between -0.5% to +0.8% for 2023.

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"I confirm these figures today," the bank's governor said on Monday, adding that they were based on the assumption that business activity will remain stable in the fourth quarter.

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