The following developments are the main elements of the management report mentioned at I of article L. 451‑1‑2 of the French Monetary and Financial Code and in article 222‑3 of the General Regulation of the AMF, which must include the information mentioned in articles L. 225‑100, L. 225‑100‑2, L. 225‑100‑3 and in the second paragraph of article L. 225‑211 of the French Commercial Code.
Other information corresponding to elements required in the management report is to be found in Section 10.6 “Cross‑reference table for the management report.”
The following should be read in conjunction with the consolidated financial statements and related notes. They contain information concerning the Groupe’s future objectives which imply risks and uncertainties, including, in particular, those described in Chapter 2 "Risks and risk management."
2023 was marked by a less sharp slowdown than expected and a level of inflation kept under control. The global economy grew 2.6% overall while inflation dropped considerably. Despite representing a slight dip versus 2022 (up 2.8%), this figure exceeded the forecasts from the beginning of last year (up 1.7%). By region, there was a major gap between the United States (up 2.4%) and Europe (up 0.5%), while China (up 5.2%) saw a return to growth following the lifting of health restrictions and reopening of its economy at the end of 2022. 2023 was hit by a major slowdown in international trade due to the trade war between China and the United States. For instance, Chinese imports and exports dropped from 4 to 5% and German exports fell by over 1% in 2023. Moreover, changes in public spending played a major part in determining growth trends. While the United States' economy was significantly bolstered by the change in public finance policy in line with the Inflation Reduction Act, in Europe (the euro zone), the drop in public spending and shrinking of the deficit weighed on the economy. Lastly, the labor market remained extremely strong across all analyzed areas: the return to work for hundreds of thousands of workers contributed to the economy’s resilience. In terms of monetary policy, 2023 was marked by a widespread drop in inflation, which had risen in the wake of the Covid‑19 health crisis and, in particular, after the outbreak of the conflict between Ukraine and Russia in February 2022. The restrictive monetary policies implemented by the Fed in March 2022, and the ECB in July of the same year, proved effective. Following a cycle of severe interest rate hikes, inflation rates returned to levels of around 2 to 5% among major developed countries at the end of 2023. Industrial raw material prices fell significantly in 2023, mainly due to the decline in demand. Oil prices also dropped despite the ongoing conflict in the Near East.
In the United States, GDP growth accelerated until Q3 2023 (up from 1.8% to 2.9% growth at an annualized rate before slowing significantly in the fourth quarter). Overall, the United States posted growth of 2.4%, largely exceeding the forecasts published at the beginning of the year (growth limited to 0.5% according to the Factset consensus). Among the main GDP items, household consumption increased by 2.2% and business investment rose 4.4%. The resilience of the world’s largest economy is all the more remarkable given the significant rise in interest rates compared to 2022.
This economic performance is due to two main factors: the implementation of the Inflation Reduction Act (and the overall increase in public spending) and the buoyant labor market. Passed by Congress in August 2022, the Inflation Reduction Act is a set of measures aimed at contributing towards decarbonization in the United States. The Act introduces a major grant system for companies and households and represents a budget of almost USD 400 billion over several years. In total, the United States' federal deficit increased from USD 1,365 billion in 2022 to USD 1,695.2 billion in 2023, an increase of USD 330.2 billion. The United States' labor market remained buoyant throughout the year. While the job market usually depends on the economic climate, we should now consider that employment has become a cause of growth. The return to work for tens of thousands of Americans therefore helped boost overall economic growth. The American economy generated nearly 3 million jobs in 2023, for a working population of around 164 million as of year‑end 2022. The unemployment rate rose slightly, but still remained very low (3.7% at year‑end, vs. 3.4% at the beginning of the year). The Federal Reserve’s fight against inflation in 2023 proved successful following several interest rate hikes (5.5% federal funds target rate in September). While consumer price inflation reached 8% in 2022, it is expected to be limited to 4% in 2023.
In the euro zone, the economic climate slowed considerably as growth fell from 3.4% in 2022 to 0.5% in 2023. The economy declined gradually throughout the year: quarterly GDP growth fell from 1.1% in Q1 to 0.1% in Q4. Within the euro zone, German GDP dipped 0.2%, whereas GDP in France, which is less dependent on exports, rose 0.9%, and Italy’s increased by 0.7%. These figures are higher than the forecasts published last year, as economists were expecting a downturn in euro zone GDP in 2023. This trajectory, which is diametrically opposed to that of the United States, is due to a higher sensitivity to exports and the shrinking of public spending. Euro zone exports, which increased by over 7.2% in 2022, remained flat in 2023. Imports, on the other hand, fell 0.5% in 2023 following an 8.1% increase in 2022: the downturn in global trade heavily impacted the economy in the euro zone, particularly in Germany. The euro zone’s sluggish economic performance is partly due to the change in public spending. The public deficit shrank from 3.6% to 3.4% of GDP, the opposite of the trend seen in the United States. Similar to the United States, the change in prices (up 8.4% in 2022 for the European Harmonized Index of Consumer Prices) drove the ECB to increase interest rates in 2023, with the main refinancing rate reaching 4.5% in September. As in the United States, inflation also seemed under control, albeit slightly higher (5.5% in 2023). The labor market was able to overcome the economic slowdown, as the unemployment rate remained particularly low for the euro zone, only increasing slightly to 6.5%.
