French Economy Eyes Q3 Growth Amid Olympic Boost and Political Clouds

The French economy is forecasted to grow slightly more in Q3 2024 due to industrial activity and the Paris Olympics. Despite this growth, political turmoil and budgetary challenges pose risks. Michel Barnier's recent appointment as prime minister adds pressure on government order amidst a divided parliament.

The French central bank has revealed that the nation's economy is expected to experience a slightly stronger growth than previously predicted for the third quarter of 2024. This optimism stems from a surge in industrial activity as well as the positive economic impact brought by the Olympic Games in Paris this August.

However, the economic horizon is fraught with challenges. While President Emmanuel Macron has recently appointed Michel Barnier as the new prime minister, the political veteran faces significant hurdles, including budget approval and deficit reduction, especially with a divided parliament post-elections.

Adding to the complexity, while the third quarter might see an uptick, the national statistics agency INSEE projects a 0.1% contraction in the fourth quarter as the Olympic-induced growth impetus wanes. Moreover, recruitment challenges persist, with construction sector negativity and reported industry order book weaknesses.

(With inputs from agencies.)