A dangerous cocktail of cash flows for French companies

The bad news is piling up for Emmanuel Macron, who has been narrowly re-elected. After I forget on Monday, The Banque de France also expects weak growth in the second quarter of 0.2%.. More than two months after Russia entered the war in Ukraine, the economic consequences of this conflict are spreading to much of the tricolor economy.

As a result, companies began sounding the alarm. “It’s not great but after a shock like (the war in Ukraine) it’s resilient,” she said. Commented on Wednesday Governor Bank of FranceFrancois Villeroy de Gallo on antenna France Inter, indicating that “Activity and employment are stable but inflation is rising sharply.” Economy Minister Bruno Le Maire now expects a difficult summer. “The hardest part is waiting for us”, He said during a trip to Evro last week.

Bruno Le Maire sounds the alarm: “The hardest part is ahead” on the economic level

future monetary deterioration

In the Bpifrance and Rexecode metric revealed Wednesday morning, nearly half (49%) of managers reported an increase in cash flow difficulties between January and March and expect more tensions during the second quarter. Between the rising costs of raw materials and materials and the difficulties of supplying, sectors dependent on foreign countries continue to go through highly turbulent areas two years after the outbreak of the epidemic.

Regarding state-guaranteed loans (PGE), 16% of the 700,000 companies that requested this assistance have already repaid their loans in full, according to figures from the Ministry of Economy and Finance and the French Banking Federation (FBF). At the same time, the vast majority of managers (78%) surveyed by Rexecode indicate that they intend to amortize it over a period of several years. The slowdown in the French economy may exacerbate repayment difficulties.

War in Ukraine: Towards a more difficult compensation for the PGE?

Explode supply difficulties

The succession of crises in recent years (epidemic, war in Ukraine) has disrupted the supply chains of global trade. Added to all these crises is the “zero Covid” policy implemented by China in recent weeks and the restrictions imposed by the authorities.

In addition, nearly half of French leaders (49%) fear prolonging the significant fallout from the war in Ukraine on higher prices (non-energy and energy-related inputs) and more supply chain difficulties associated specifically with longer delivery times, shortages or transportation cost. In the end, producer prices in the industry rose.

Automobile and live equipment industry

Activity in the industry remained broadly stable in April, according to forecasts from the Bank of France. But behind this stability, there are contradictions between sectors. Pharmaceutical and chemical industries are increasing in activity while automobiles continue to decline. The equipment sector is very shaken by the containment measures in China and the closure of the port of Shanghai.

A large part of the French companies specializing in computers, electronic products, machinery, equipment and electrical equipment are largely dependent on Asia to be able to guarantee their production.

COVID-19: Containing Shanghai will ‘severely punish’ freight forwarding

Services are working fine

On the other hand, the third sector should perform well in the coming weeks. Most sectors in services rely on increased activity, particularly in housing, temporary work or even business consulting. Given the weight of the services sector in the French economy, growth should be largely driven by services during the summer.

cloudy look

Most forecasting institutes have revised their growth forecasts for 2022 downward. The International Monetary Fund (IMF) now expects activity to rise 2.9% in 2022 in its latest spring forecast, versus 3.5% in its previous estimate. For its part, the government, which is currently preparing a revised budget for the coming weeks, will have to revise the growth figures in 2022, which are currently still set at 4%.

The International Monetary Fund has said that Russia’s war in Ukraine is shaking Europe’s economy