Ukraine war hitting France's growth and hiking inflation: central bank

[PARIS] France's economic growth is set to slow in 2022 while inflation rises, as the conflict in Ukraine hits the economy, the country's central bank warned Sunday, presenting two possible scenarios.

Growth is expected to drop half a point to 1.1 per cent, the Bank of France said.

France's gross domestic product (GDP) will grow by 3.4 per cent this year if the price of oil averages US$93 per barrel, under one scenario; but by only 2.8 per cent if it reaches US$119, the central bank predicted.

Without the Ukraine war, and the effect on Russian oil supplies, that growth forecast would have been between 3.6 and 3.9 per cent.

The bank expected inflation to reach 3.7 per cent this year - or 4.4 per cent under the second scenario.

The negative impact of the Ukraine conflict on the French economy will have three main effects, the bank said: higher energy and raw materials prices; lower consumption and investment; and a hit on foreign trade.

Bank of France director-general Olivier Garnier said the central bank had not factored in a total halt in Russian oil and gas supplies. AFP