The output of EU UK will be expensive for the French economy. The International Monetary Fund (IMF), citing Brexit has revised down its growth forecast for France in 2017. It now expects a GDP growth of close to 1.25% against 1.5% previously.
The British decision to leave the European Union has however not affected the growth forecast for 2016 still expected to 1.5%, the IMF said in its final annual report.
This change for 2017 “primarily reflects a slower recovery in business investment, due to the increase in uncertainty and volatility in financial markets, and to a lesser import demand from the UK and other European countries, “the IMF said.
1.4% growth in the euro area
The organization last week lowered its growth forecast for the whole of the euro area in 2017, relying now on 1.4% against 1.6% previously, due mainly to the negative impact of Brexit.
In France, the consequences of the referendum on consumption but should remain “limited short-term,” added the international organization while stressing that its estimates are only valid if the conditions on the financial markets remain stable and the exposure of French banks in the UK remains restricted.
Brexit could even have a positive, said Christian Mumssen, IMF Director for France, during a conference call: “The impact of the referendum is likely to lead to lower rates interest and this could again support investment and consumer demand for, for example, loan refinancing. ”