France's Modest Growth Amid Aerospace Momentum and Political Uncertainty

France's economy likely grew modestly in Q4 2022, driven by aerospace and defence sectors, despite political challenges, according to the Bank of France. Growth is forecasted at 0.2%, slower than the previous quarter. The outlook points to slowed industrial activity but stronger service-sector growth, amidst ongoing budgetary concerns.

France's economy saw modest growth in the final quarter of last year, propelled by the aerospace and defence sectors despite existing political uncertainties, the Bank of France reported in its business sentiment survey.

The nation's GDP likely increased by at least 0.2% from the previous quarter, maintaining the central bank's previous estimates after a 0.5% growth in Q3. The monthly survey conducted amongst executives of approximately 8,500 companies from December 22 to January 7 noted continued economic advancement in December, albeit at a slower pace than November's.

Looking ahead, January presents a potential shift in momentum, as industrial activity is expected to decelerate due to slower aerospace production and challenges in order visibility. Conversely, service-sector firms anticipate growth aligning more closely with decade averages, while construction activity remains stable. Though the uncertainty indicator declined, it remains high due to budgetary challenges, with the failure to pass the 2026 budget spotlighting the need for potential constitutional measures.

(With inputs from agencies.)