Research Dept. News
|
|
|
|
Monthly Report, num 330 - December 2009
|
|
|
European Union - France
|
|
|
|
|
France grows again in the third quarter
|
|
The French economy confirms its recovery in the third quarter.
|
|
The French economy confirmed its recovery in the third quarter with 0.3% growth quarter-on-quarter, the second in succession. Consequently, the year-on-year drop in the French economy was again reduced over this period, reaching, according to the consensus, a reduction of the economy close to 2% in 2009 compared with the previous year. According to our forecasts, as from the first quarter in 2010 the economy will once again post year-on-year growth.
|
|
|
|
An analysis of the different GDP components shows that this upswing has mainly been supported by improved consumption (public and private) and by the foreign sector, thereby offsetting a further reduction in investment. Public consumption and net exports are expected to continue this trend in the coming quarters, becoming the main engines of the economy, while private consumption, which reduced its growth during the third quarter, will continue to lose share.
|
|
|
|
The most frequent indicators highlight this weak consumption. Consequently, in spite of falling prices in the last few quarters, retail sales still show no clear signs of recovery. It is expected that the labour market, which in September had already reached 10%, its highest level since 1999, will continue to worsen over the coming year. This, together with the expected upswing in prices in the last few months of 2009, will keep private consumption at a secondary level, especially as the fiscal stimuli aimed at encouraging consumption will come to an end.
|
|
|
|
On the other hand, industrial production fell in September after four consecutive months of increases. Given this outlook and the low utilization of production capacity, at 70.8% in the third quarter, investment will remain at low levels. This, however, did not prevent another rise in industrial confidence in the month of October.
|
|
We expect 1.3% growth in 2010 although there are certain risks.
|
|
The greater relative importance of the French public sector, which helped to contain the declining economy in 2009, will mean that the upswing in 2010 will be less than that of other European economies, with an expected growth in GDP of 1.3%. However, there are some risks that might slow up this recovery: further deterioration in the labour market or less growth than that demanded by the European Union. That's why the French Finance Minister, Christine Lagarde, is cautious when analyzing trends in the French economy and has chosen to maintain government aid to stimulate the economy in 2010.
|
|
The French government is launching a new stimulus plan totalling 35,000 million euros.
|
|
This is the direction of the new stimulus plan by the government for the coming year, totalling 35,000 million euros and aimed largely at university education and technology. It is expected that a third of this sum will come from the French financial system returning part of the aid it received in 2009. The remaining amount (1.3% of GDP) will be financed by issuing public debt, which is why this plan is called «Le grand emprunt» (the big loan). This will further weaken the French public accounts, which according to the government's estimates will attain deficits of 8.2% and 8.5% of GDP in 2009 and 2010, respectively. Given this situation, the Finance Minister believes it will be very difficult to bring the deficit down to 3.0% in 2013, as required by the European Union.
|
|
|
You can susbcribe now to be nofified by email every time the Monthly Report is updated in the internet.
|
All documents are in Adobe Acrobat format (PDF).
To view a document in PDF format you need the Adobe Acrobat Reader. If you don’t have it already loaded on your computer, you can donwload it now.
|
|
Direct link to the Research Dept. in your mobile
We'll send you a free SMS with the link
|
