Friday, December 9, 2016

Growth : the Bank of France a little less optimistic for 2016 and 2017 – The Echoes

The recovery will, according to the Bank of France. This Friday morning, in effect, the national bank has revised downward its forecasts for the current year but also for 2017 and 2018. A bad surprise then that the day before, it had left unchanged its forecast for the fourth quarter and suggested an end of the year a bit more dynamic.

Now, according to the latest semi-annual forecasts of the Bank of France , the French growth should be 1.3% in 2016 and 2017. Then she picks up barely in 2018 to reach 1.4%. Forecasts below those that the national bank put forward up to now : 1.4% in 2016, and 1.5% in 2017, and 1.6% in 2018.

Brexit and the rise in the oil

This resetting of expectations the Bank of France is an international environment that is expected to be less buoyant over the next few years. “The projection is affected, in particular, prospects of external demand addressed to France’s less favourable, in particular because of the impact of Brexit “, underscoring the Bank of France, which, therefore, is revising downward its projections of French exports in 2017 and 2018.

The Hexagon should no longer benefit from the positive effects of the decrease in the price of oil, the source of major gains in term of purchasing power for households in the last two years. “Since the first quarter of 2016, the oil price has rebounded and it is expected to continue to recover gradually until 2019,” stressed the institute of issue.

The negative impact of this recovery in oil prices should only be “partially” offset by the recovery of wage income, also quite slow, in a context of ” lesser force “. And after having recorded a peak this year, there should be a ” deceleration in domestic demand.”

Slow improvement in public accounts

moreover, and even if it is a point that should be taken with caution given the elections coming, the Bank of France anticipates an improvement in a slow public finances in 2016 and 2017. “After being set to 3.5% of GDP in 2015, the public balance, nominal reach – 3.3% of GDP in 2016, and then 3.1% in 2017, without passing, therefore, below the threshold of 3 % deficit “.

As to the rate of compulsory levies, it ” would drop in 2016, 44.5% of the GDP, after 44.7% in 2015, with the continuation of relief of taxation and social charges provided for in particular in the Pact of responsibility and solidarity, in order to stabilize in 2017 “.

The government’s forecast is always a little more optimistic

the image of the Bank of France, almost all international institutions have revised downwards their growth forecasts for France.

The european Commission now expects a 1.3% increase of GDP in 2016 and 1.4 per cent next year, while the OECD bets respectively 1.2% and 1.3%.

The French government has also lowered slightly its own forecast for growth in 2016, to 1.4%, while maintaining unchanged at 1.5%, its projection for 2017. A hypothesis regarded as “optimistic” by the High council of public finance (HCFP), responsible for assessing the credibility of budgetary forecasts.


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