Economic Impact of the Olympic Games in France

PARIS (Reuters) – Hosting the Olympic Games provided a boost to France’s service sector in August; however, the country’s political crisis continues to cloud the economic outlook, according to the central bank’s monthly business survey.

The euro zone’s second-largest economy is projected to see underlying growth of 0.1-0.2% in the third quarter from the previous month, with the Bank of France maintaining its estimate.

The Olympics could contribute an additional quarter percentage point of growth due to increased activity in hospitality, event management, and security, especially in the Paris region.

Nonetheless, the complete impact of the Games, which includes ticket sales, broadcasting revenues, and employee bonuses, is not fully represented in the survey, according to the central bank.

France’s national statistics agency projected a 0.4% growth for the third quarter but anticipates a reversal into a 0.1% contraction in the fourth quarter as the initial boost from the Olympics wanes.

The central bank’s monthly survey of 8,500 businesses revealed that activity in other sectors remains challenging. Manufacturing is struggling due to softened demand for electric vehicles, while transport equipment manufacturers face supply chain issues.

Additionally, the construction sector shows weakness, with executives expressing concerns that the ongoing political crisis is impacting their decisions regarding new investments and public contracts.

Recruitment difficulties also saw a slight increase, with 36% of businesses reporting challenges in August, up from 33% in July. This rise was primarily seen in sectors influenced by the Olympics.