Macroeconomic environment, Manufacturing production and confidence indicators, International prices Commodity prices and EUR/USD exchange rate
Macroeconomic environment
Xerfi's scenario for 2025
GDP growth expected to remain below 1% until 2025
France's GDP France's GDP growth slowed slightly to 0.2% in Q2 2024, after increases of 0.3% and 0.4% in Q1 2024 and
Q4 2023, respectively. The rate of decline in investment slowed slightly compared to the previous two quarters, but the contribution of foreign trade to growth also declined (due to a recovery in imports and a slowdown in exports). Household consumption returned to slightly positive growth (+0.1% after -0.1% in Q1). Economic activity is expected to remain sluggish until 2025, with growth remaining at around 1% per year, below France's growth potential (estimated at around +1.5%).
Note: The outcome of the parliamentary elections and questions about the economic policy to be pursued by the new government open a period of uncertainty. In this context, the forecast consists of describing the most likely scenario, taking into account, on the one hand, recent economic developments and, on the other hand, the budgetary constraints that the future government will have to face, whatever its political orientation.
Industrial activity and business climate
Manufacturing production and confidence indicators
Towards a contraction in manufacturing activity in 2024
Manufacturing output will fall by around 1% in 2024. Penalised by the decline in construction activity, industrial activities such as steelmaking, basic chemicals and non-metallic construction materials (glass, cement, etc.) will once again be in steep decline. Another sector suffering is the automotive industry. Activity will fall back sharply in 2024, affected both by sluggish demand in Europe and by a period of transition between old and new models in French factories. In addition, the production of capital goods will fall sharply this year, penalised by the slowdown in business investment and relocation. One of the main positive points that will limit the decline in manufacturing in 2024 will be the recovery in agro-industrial activity, which will benefit from a revival in consumer spending associated with the easing of inflation. The aerospace industry, which is continuing its post-Covid-19 catch-up, will remain one of the most dynamic industrial sectors, although its growth is forecast to significantly slow down with respect to 2023.
Small upturn in business sentiment in August, following a fall in July
After plunging to a three-year low of 94 in July, the general business climate recovered slightly in August. However, at 97, the indicator remains well below its 'normal' level, which corresponds to its long-term average (equal to 100). In detail, there was a general improvement in the business climate in all sectors (industry, services, trade and construction). However, only in construction did the indicator exceed its long-term average, while in all other sectors it remained below this level. Finally, the employment climate improved by 2 points in August, after falling to 96 in July.
International prices
Commodity prices and EUR/USD exchange rate
Towards a slight decrease in oil prices to around $80/barrel on average by2025
Over the past 12 months, the price of Brent crude has twice risen above $90/barrel (on a monthly average), first in September-October 2023, then in April 2024. These periods of strong growth were followed by downward adjustments that brought the price of a barrel below $80, as in December 2023 or September 2024, when the price of Brent fell to around $70/barrel, hitting a low point for more than 3 years. The strong rebound in the summer of 2023 was linked to the global market deficit in the 2nd half of 2023 and was explained, on the supply side, by the production cuts implemented by the OPEC+ countries (led by Saudi Arabia and Russia) and, on the demand side, by the strong recovery in fuel demand in China due to the end of health restrictions. A clear downward trend has reappeared since May 2024, against the backdrop of a normalisation (or even weakening) of Chinese demand, a still gloomy global economic situation, an expansion in non-OPEC+ oil supply (United States, Canada, Brazil, Guyana, etc.) and, finally, the prospect of a gradual reintroduction of barrels withdrawn from the market by OPEC+. Beyond the geopolitical ups and downs that can cause temporary surges (such as the temporary freeze on Libyan production at the end of this summer), the fundamentals of the oil market point to a moderate fall in the price of Brent crude until 2026, to an annual average of around $80/barrel.
After declining in 2023, industrial metals prices turned sharply upwards in the spring of 2024, but a further downward adjustment has been in evidence for the past three months. Upward pressure has been particularly strong for metals that play a crucial role in the energy transition (renewable energies, batteries, networks, etc.). This is particularly true of copper and, to a lesser extent, nickel, aluminium and zinc. The recent rises in these prices reflect fears of a mismatch between supply and demand over the next 10-15 years. However, we expect moderate annual price rises in 2024 and 2025, as world metals markets should be in surplus by then, against a backdrop of still weak global growth.
