Research Dept. News
|
|
|
|
Monthly Report, num 355 - March 2012
|
|
|
European union - France
|
|
|
|
|
The French economy provides a pleasant surprise in the last quarter of 2011
|
|
French GDP rises by 1.7% in 2011 but is still not at its level prior to the Great Recession.
|
|
The data published by the French statistics institute showed a slowdown in the French economy in the fourth quarter last year that was less than had been feared. GDP rose by 0.2% compared with the third quarter, only one tenth of a percentage point less than in the previous period. The slowdown in household consumption to 0.2% was offset by an acceleration in investment, thanks to capital goods. However, the main contribution to GDP growth came from the foreign sector, due to the decline in imports. In 2011 as a whole, GDP increased by 1.7%, compared with the expansion of 1.4% in 2010, so the level prior to the great crisis of 2008-2009 has still not been reached.
|
|
|
|
In spite of the pleasant surprise provided by GDP in the last quarter of 2011, we have kept our forecast of an annual rise of 0.1% for 2012. In fact, economic climate indicators are still generally below their long-term average and prospects have declined further. More in the short term, leading indicators from the first quarter of this year point to stabilization.
|
|
Leading indicators in the first quarter of 2012 point to stabilization.
|
|
Consumer confidence improved slightly in January but was still below its historic average. There is still concern due to the unfavourable performance of the labour market. In fact, the unemployment rate has a slightly upward trend and is close to 10%, while there were net job losses in the last quarter of 2011.
|
|
The French government reduces company Social Security contributions to boost competitiveness.
|
|
In January, manufacturing entrepreneurs predicted a 7% rise in investment in value terms for 2012, with greater dynamism in the motor vehicle industry. However, their replies also suggest there might be a slight slump in the first quarter.
|
|
|
|
With regard to the foreign sector, although this posted a slowdown in 2011, the levels of goods purchased and sold abroad exceeded those prior to the Great Recession. Exports were particularly boosted by agricultural products and luxury goods, while imports rose mainly because of rising commodity prices. Overall, the trade deficit increased to 69.6 billion euros, a record level, with an annual rise of 35.1%, clearly showing the competitiveness problems of French industry.
|
|
|
|
Looking at supply, the situation is similar. In October-December, industrial orders not including transport except automobiles decreased by 1.1% in value terms compared with the preceding quarter and only rose by 0.8% compared with the same period in 2010, although foreign orders were up 2.4%. On the other hand, the confidence of the secondary sector was at a low, so there is not much optimism regarding the French industrial panorama in 2012. In construction, the level of confidence was closer to normal but deteriorated slightly in February. And the sentiment in services fared no better.
|
|
|
|
For its part, bank credit to the non-financial private sector continued to moderate but rose by 5.3% in 2011. Financing to firms was up by 4.4% year-on-year, while credit to households increased by 6.0%.
|
|
|
|
To tackle the problems of competitiveness, in February the government presented a revision of the budget act for 2012, which also resulted from a change in the GDP growth projected for the current year from 1% to 0.5%. Among other measures, as from 1 October 2012 company contributions to Social Security will be reduced, offset by a hike in the general rate of value added tax (VAT) from 19.6% to 21.2% and an increase of 2 points in capital gains tax to 10.2%. Moreover, budget items will be cut to ensure the target public deficit of 4.5% of GDP is achieved.
|
|
|
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
|
