Friday, July 29, 2016

France-growth stalled in the second quarter – Boursorama

 * No growth in Q3 than Q2  increased to + 0.7% * The strikes affected  production * Stagnation of consumption and decline  in business investment * Economists rather  reassuring on the objective of 1.5% in 2016  (updated with comments from economists) by Myriam  Rivet PARIS, July 28 (Reuters) – the French  economy stagnated in the second quarter, blaming  the backlash of its very strong start to the year  and the effects of disruptions related to the  movement against the bill work, without calling  into question the scenario of growth close to 1.5%  in 2016, say economists. For INSEE noted at the  same time the first quarter growth to 0.7%,  against 0.6% previously announced. And acquired in  2016, namely the level of GDP if growth was zero  last two quarters, remains at 1.1%. The first  estimate for the April-June GDP falls below the  forecasts of economists polled by Reuters and the  Bank of France (to 0.2% in both cases), and the  latest forecast by Insee published mid-June, which  stood at 0.3%. In a statement, the finance  minister Michel Sapin recognizes that the figure  is “disappointing”. But “beyond  the jolts from one quarter to the next, the French  economy remains on a recovery momentum that does  not affect the forecast 1.5% growth in  2016,” says t -he. This assessment is shared  by Axelle Lacan, economist at the institute  COE-Rexecode, who, “with gains of 1.1%, this  seems feasible.” Michel Martinez, economist  euro area at Societe Generale CIB also judge that  “there is no reason to worry about a  reversal of growth”, although he stressed  that “to reach 1.5% in average in 2016, it  will take 0.55% growth in the third as the 4th  quarters. ” Both recall that this backlash  was expected after a very dynamic first quarter,  even if the braking was greater than expected. The  contribution of final domestic demand to growth in  the quarter was thus void and that the change in  business inventories cost him 0.4 points, only the  foreign trade turned positive (0.3 points),  allowing him to salvage. Stopping refineries  because of strikes in May and June has penalized  the spring production of manufactured goods  (1.0%), impacting the total output of goods and  services (-0.2%). But more surprisingly, household  consumption, which jumped 1.2% in the first  quarter, stagnated in both goods (0.0%) than for  services (-0.1%), although INSEE has reported  always vigorous energy costs. This sullen  consumption was particularly reflected in the  results of L’Oréal, the cosmetics giant who  said Friday that France had cost him a point of  growth for overall sales in the second quarter.  ATTACK EFFECT? It is not guaranteed that the  traditional engine of the French economy to start  all full in the third quarter, in an environment  marked by a series of Islamist attacks, including  the attack to the truck that made 84 dead July 14  in Nice . “The attacks had hitherto a  temporary effect on consumption, therefore on the  economy () but now there is a repetitive aspect  that will begin to penalize more sustainable  economy through including higher the security  costs for companies, “said Axelle Lacan. The  overall investment contracted by 0.4% after three  quarters of strong growth, the companies falling  by 0.2%. He had jumped from 2.1% in Q1 to approach  the expiration of the tax system of  “overdamping” productive investment  which was eventually extended for one year. While  economists do not anticipate any marked rebound in  business investment during the summer, they do not  provide as long as it is affected by the prospect  of “Brexit”. “Investigations in  July on the business climate does not indicate  Brexit of major impact in France, contrary to what  has been observed in Germany,” noted Axelle  Lacan. For his part, François Letondu (Societe  Generale) estimates that the impact of Brexit  growth will occur mainly via exports to the UK and  save the confidence of French companies,  especially since they benefit from conditions very  favorable financing and evolve a sound banking  system. Overall, these two economists expect a  very gradual reacceleration in the second half  that would strengthen the government’s  target for the year. “We remain on a trend  of modest recovery but is still better than what  we knew in previous years,” said Francois  Letondu. “In 2015 we had exactly the same  situation, it is normal that an economy that is  relatively open, which faces external shocks  particularly important enough (as lower oil  prices) know quite volatile rates of growth  “has he said. Detailed statistics on the  site of INSEE: French The  indicators in real time ECONFR Indicators of real  time eurozone ECONEZ Update on French conditions  ECO / FR (Edited by Yann Le Guernigou) 


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