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This is a new one, which falls at a worse time for the government of François Hollande, but also for the possible candidacy of the president of the Republic, six months after the election of 2017. The French growth should eventually grow of” a scant 1.3 % “ this year, announced the national Institute of statistics and economic studies (Insee), Thursday, 6 October. A review of importance relative to the previous forecasts of the Institute, which forecast in June on an increase of 1.6 % of gross domestic product (GDP) to 2016. This new estimate, which corresponds to the one announced, Tuesday, October 4, by the international monetary Fund (IMF), is now less than the anticipation from the government.
The executive provided so far 1.5% of growth to 2016, and has built its budget 2017 on an equivalent increase for the next year. the ” The French growth remains strong and the forecasts of the Insee do not compromise our objective of public deficit to 2016, or our growth forecast to 2017 “, was held to reaffirm Michel Sapin.
How to explain the change of the foot of the Insee ? First, by the weakness of the economy habs in the second quarter. ” We have committed an error of prediction was significantly higher than that of habit “ has recognized Dorian Roucher, head of division, synthesis of the economic of the Insee. Initially expected up 0.3 %, the GDP has finally dropped 0.1 % from April to June, which had indicated the Insee at the end of September. ” We had under-estimated the effect of the strikes of the spring [against the law], who did not remain confined to the refineries, but have also affected the chemistry and transport “, says Mr Roucher. After several quarters of sustained growth, the period was also marked by an unexpected drop in household consumption and business investment services.
Loss of competitiveness
Insee also revised downward its forecast for the second half. The Institute now expects an increase of only 0.2% of the GDP in the third quarter (against +0.3 % previously) and 0.4% in the fourth. And this time, it is trade that hit the French economy. Exports lights are disabled by the downturn in world trade, the end of the decline of the euro, but also by a significant loss of competitiveness. the ” The French exporters have lost market share in the first half, “ indicates Vladimir Passeron, head of the department of economic Insee. So that the export traffic is expected to slow markedly over the year (+0.7% after a record increase of 6 % in 2015).
This air hole is due to a combination of negative factors : the difficulties of Airbus production, which suffers from problems of supply from its supplier Zodiac Aerospace (seats and toilets of planes). But also the weakness of the cereal harvest this year, and the setbacks to the tourism sector with the succession of attacks that have occurred this summer.
so far, the analysis of the Insee is not devoid of good news. Household consumption, a pillar of growth, will continue to grow this year (+1,5 %). The investment in housing should finally cease to weigh on growth. Ironically, the indicators seem to finally earnings to the green side of business : the business climate, a reflection of the morale of business leaders, remains well oriented. Especially the rate of profit margins are at their highest (31.8 percent) since the crisis, although they remain below their 2008 level (33.1 percent). As for business investment, it should jump to the total of 3.6 % on the year, a score unheard of since 2011.
Finally, driven by the improvement in the start of the year and the devices decrease in the cost of the work put in place by the government (CICE, pact of responsibility, a bonus of employment in SMES), the labour market is showing signs of moderating. ” For a year, the commercial employment is progressing in France “, said Mr. Roucher. Insee anticipates approximately 165 000 new jobs this year, a pace that is ” sufficient for unemployment to drop ” in france. ” net job creation in the private sector [...] allow Insee to provide a net decrease in unemployment in France to 9.5 % by the end of 2016, the lowest rate of unemployment since mid-2012 [9.4% in metropolitan France in the third quarter of 2012] “, welcomed Mr Tree.
France lagged behind its neighbours
The new vintage of forecasts, however, leaves a bitter taste. At the end, growth will be ” similar “ to that of last year (+1.2 per cent), took care to emphasize the Insee. However, the French economy, like that of the euro area as a whole, has experienced for the last two years a new conjunction of favourable factors (euro low interest rates to the mat, the fall of a barrel of oil). Companies, they have benefited from economic policy to extent of the part of the government. In this context, their behavior does not call the specialists. They have restored their margins, they invest, start again to hire… but they are losing market share, to the benefit of their counterparts in German and Spanish in particular. the ” now that they have restored their margins, the companies will lower their prices to regain competitiveness, to use the investments made up for in range, or will we once again be disappointed by the exports at the end of the year, which would not fail to question the ability of the French economy to restore its competitiveness ? “ asks Mr. Roucher.
anyway, for the third consecutive year, France is expected to lag behind that of its neighbors. Its growth will be less than the average for the euro area (expected at +1.6% Insee), and substantially below that of Germany (+1,8 %).
And the propagation of uncertainties from the beginning of the summer is not to reassure forecasters. Since the vote in favour of Brexit at the end of June, up to perturbations that are likely to create the american presidential election in November, and the referendum the Italian constitution, in December, the end of the year promises to be eventful. As for 2017, it will mark a comeback of inflation based on the increase of the oil, and the elections major in the major countries of the euro area.
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