French Economy Shows Resilience Despite Iran Crisis and Rising Energy Costs
Impact of Middle East Conflict and Rising Energy Prices on French Economy
Initial Economic Response and Central Bank Assessment
PARIS, May 12 (Reuters) - French companies have so far absorbed the shock from the conflict in the Middle East, but pervasive uncertainty and higher energy costs are beginning to test the economy's resilience, the central bank said on Tuesday in its monthly business survey.
The Bank of France said there was so much uncertainty over the outlook that it could not provide its usual growth estimate for the quarter. It said, however, that activity continued to expand in April, albeit more slowly, according to its April 28 to May 6 survey of around 8,500 firms.
Key Sectors Supporting Industrial Output
Industrial output remained a key support, buoyed by defence-linked sectors such as aeronautics, electrical equipment and electronics, even as growth eased in construction and stalled in services.
Production and Capacity Utilisation
Companies reported that production held up better than expected, keeping capacity utilisation close to its long-term average.
Challenges and Uncertainties Facing Businesses
Rising Costs and Supply Chain Issues
Nonetheless, business leaders cited rising uncertainty following the outbreak of the conflict, with higher oil prices feeding through to raw material costs and transport expenses. Supply chain problems have grown worse in energy‑intensive industries, while services exposed to fuel prices - notably transport and logistics - are seeing margins squeezed.
Outlook for the Coming Months
Looking ahead to May, firms expected activity to level off or decline slightly, particularly in services.
(Reporting by Leigh Thomas; Editing by Hugh Lawson)
