INSEE: Olympic Boost to French Economy Fades as Year-End Approaches

• France’s economic growth in Q3 2024, fueled by the Paris Olympics, is expected to slow down in Q4, with a projected contraction of 0.1%.
• Tourism and related spending during the Olympics contributed to a 0.3% growth in Q3, but the effect will fade by the end of the year.
• The INSEE forecasts overall GDP growth for 2024 at 1.1%, in line with government estimates.

Paris, 9 September (FinanceFlashNews) – The French economy gained momentum in the third quarter of 2024 due to the Paris Olympics, but the recovery is set to lose steam by year-end, according to INSEE, France’s national statistics office. While tourism and consumer spending bolstered growth in the second-largest economy of the eurozone, the long-term outlook remains cautious.

INSEE predicts that GDP growth in Q3 will reach 0.4%, slightly down from the previous forecast of 0.5%, following a 0.2% rise in the previous quarter. The agency credits the Olympic Games for a 0.3% boost in growth, thanks to ticket sales, broadcasting rights, and tourist spending in hotels and restaurants.

However, this positive impact is expected to dissipate in Q4, with INSEE forecasting a 0.1% contraction by the end of the year. For the full year, INSEE maintains its 1.1% GDP growth projection, in line with earlier government forecasts. Finance Minister Bruno Le Maire had previously suggested that Olympic-related activities could push growth slightly above the official 1% target.

Political uncertainty is another challenge for the French economy. President Emmanuel Macron recently appointed Michel Barnier as prime minister, tasked with forming a cabinet and drafting the 2025 budget. The fractured parliament and high interest rates are causing companies to delay investment plans, according to INSEE.

The weak performance of Germany, France’s largest trading partner, also clouds export prospects. Nonetheless, lower inflation could improve household purchasing power, potentially offsetting some declines in consumer spending post-Olympics.

INSEE predicts that inflation will remain below 2% for the rest of the year, falling to 1.6% by December.

Keywords: French economy, INSEE, GDP growth, Olympics, inflation