After accelerating full throttle from 2017, the French economy is experiencing, since the beginning of the year, a slight slowdown. Nothing alarming at this point : the indicators are on the wane, while remaining positive. According to the notes of the national Institute of statistics and economic studies (Insee), published on Tuesday 20 march, the gross domestic product (GDP) should grow by 0.4% in the first quarter and the second quarter of 2018. A slower pace than previously, but which carries the acquired growth for the year as a whole to 1.6 %.
As of 2017, it is especially the business investment that takes the activity. Households, themselves, have quite substantially reduced their consumer spending and investment. Their purchasing power has been undermined by a resurgence of inflation and the spreading of the drops of loads. It should, according to the Insee, recover in the spring. But it is not said that the trust, which has also slowed in February, will follow the same trajectory. A major challenge for the government ahead of key social movements.
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The growth cup
A-t-on reaches a peak of optimism over the past year ? Possible. The Insee, which had consistently revised upwards its forecasts, in 2017, to finish on-year growth of 2 %, now plays the caution. In December 2017, the statisticians were counting on GDP growth of 0.5 % for the first quarter of 2018. It would not be more than 0.4 %, industrial production surprised to the downside in January.
Once again, France is a little less well than the average for the euro area. If the activity of the member countries of the monetary union is also likely to shrink slightly, growth would be maintained theoretically at 0.5% per quarter in the beginning of the year.
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An international environment that is ever-bearing
France, like its neighbours, will continue in effect to benefit the health of the global economy. In the United States, the implementation of the tax reform – marked by the decrease of the corporate tax and the taxation of the incomes of the rich – has, it seems, helped to prolong the expansion cycle. Despite the attempts at protectionist president Donald Trump, the american imports, therefore, should not falter.
The upturn is all the more marked that the major emerging economies have approached the year with the wind at your back. The industrial outlook is good in Brazil, India and Turkey ; the Russian economy has benefited from the rise in oil prices ; and imports from China, despite a slight decline in activity, increased in the first quarter.
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The French exports are recovering
This sustained global demand to the benefit of the French economy. Driven by more deliveries to aviation, exports jumped by the end of 2017. They will continue their momentum in the first quarter, with the sale of a ship. Better : the foreign trade should finally contribute positively to growth ; it is a never-before-seen in the past five years, according to Insee.
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Firms less optimistic, but willing to invest
And yet, the times are already more euphoria. The business climate starts to sting the nose. While it tutoyait the vertices in December 2017, the index that synthesizes has lost three percentage points since the beginning of the year. Industry, services, building, trade… All sectors are affected.
Should we be worried ? Non, assure-t-on to Insee. “We are still very much beyond the average of the long-term” and the strength of the activity is always reads in the prospects for investment. The rates had reached in 2017 new levels for forty years. They would still be 1.1 % and 1.2 % in the first and in the second quarter.
This is not surprising : the productive fabric of france has not finished his moult. The companies are seeking to increase their capacity to follow the pace of the recovery. They are more likely to face difficulties of supply and recruitment problems.
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The job is progressing
These tensions as an opportunity for the labour market. Despite the removal of subsidised jobs, analysts predict over 113 000 creations to post in the first half. A figure much higher than anticipated. It should not, however, expect a decline in unemployment of the magnitude of the one recorded in December 2017. Fallen to 8.9 % of the active population, its rate should be kept at the same level until June.
Wages, in contrast, would continue to gently climb. It is estimated their increase to 2 % in the private sector in 2017 and 1.2% for the first six months of 2018. Not to excite the household…
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Household consumption in berne
They have seen their buying power whittled away at the beginning of the year by the implementation of the first package of measures adopted by the government. Inflation, estimated to be 1.6 %, also weighed on incomes, forcing many French people to dip into their savings. The savings rate would be increased from 14.3 % at the end of 2017, to 13.7 % at the beginning of the year.
But if the purchasing power is expected to significantly recover in the second quarter, the expected consumption of households is still in half-tint. It is their investment. A decline which is reflected on the building permit, and the transactions of old dwellings.
It is unclear the impact that will have on the business strikes to come to the station. In 1995, the great social movements had cost, according to the analysts, 0.2 of a percentage point of quarterly GDP.
