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Growth is still on track 7/31/2017
In France, the recovery is setting in at a solid pace, with quarterly GDP growth of 0.5% in second-quarter 2017, in line with our expectations. The growth breakdown consolidates the headline figure: growth was supported by final domestic demand (contribution of 0.4 point) and net exports (contribution of 0.8 point) and reduced by the negative 0.6-point contribution of the change in inventory. The main growth engines were a mild rebound in household consumption, a very strong upturn in exports, and the unfaltering momentum of residential investment. Corporate investment, in contrast, slowed sharply following the expiration of the extra depreciation measure. In the light of the new improvement in the July INSEE business confidence surveys, short-term prospects are still looking bright. Based on the figures just released, our growth forecast is mechanically raised from 1.6% to 1.7% in 2017 in annual average terms, and we expect it to hold at this pace in 2018. Whether the new administration’s proposed fiscal and budget measures will have a net negative or positive impact on growth remains an open question.
On the road to recovery 7/25/2017
French growth has resumed since 2013, albeit at a mild pace of only 1%. This sluggishness is partly cyclical. It can also be traced back to structural factors, notably the low participation rate and feeble productivity gains. Yet both indicators show room for improvement, suggesting major sources of growth that should be fairly easy to mobilise, assuming the right reforms are implemented. Poor competitiveness is also to blame for the lacklustre pace of growth. An improvement is underway, notably through higher corporate profit margins. Problems persist however, such as the high cost of non-labour inputs and unsatisfactory non-price competitiveness. Training, innovation and mobility appear as effective leverages for improving the situation, on which the new government precisely intends to focus its economic policy, in addition to pursuing efforts to reduce labour costs in particular and taxation in general.
More growth; barely more inflation 7/11/2017
French GDP growth is showing clear acceleration. In 2017, it is likely to average 1.6% over the year (from 1.1% in 2016), a figure that has been upgraded thanks to a robust carry-over and solid economic trends: confidence surveys have improved markedly, employment is growing strongly, unemployment is falling, and the real estate market is in much better shape. Monetary and financial conditions remain favourable. Global growth is firming up. Exports and investment promise to be the engines of growth in 2017, whilst household spending will slow down under the influence of rising inflation. However, inflation is still low, and continues to be held down by the persistence of substantial excess capacity in the economy.
France: in better shape 6/23/2017
2017 growth forecast revised up to 1.6%. Further improvement in the business climate in June.
France: higher growth in sight 6/23/2017
French growth is likely to accelerate strongly in 2017.
Overview of the French economy 6/13/2017
The French economy now seems to be in better shape than it was five years ago, but the improvement has been limited. Growth has picked up, but still lacks vigour. Although progress has been made to boost competitiveness, the country still has a long way to go. The fiscal deficit continues to be reduced, and the unemployment rate has finally begun to decline. Yet given the slow pace of adjustments, both indicators are still high. According to the European Commission, these imbalances are gradually being corrected, to the point that in 2018, France’s status could be revised from “excessive imbalances” to “imbalances”, and the country will probably exit the excessive deficit procedure.
France: unemployment down, confidence up 5/26/2017
The unemployment rate is at its lowest since early 2012 and business confidence is at its highest since late 2010.
France: good news on the labour market front 5/24/2017
In France, key job market indicators for the first quarter of 2017 were positive on balance.
The job market is holding well 5/12/2017
Net job creations are still going strong thanks to the services sector and less to temporary employment services.
France: A (temporary) slowdown 4/28/2017
Growth was limited to 0.3% in the first quarter. Consumer spending is sluggish. Investment is strong.

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