French growth should settle in the last quarter

Paris (AFP)

French economic growth should slow in the last quarter, slowed especially in industry, according to the Bank of France, which however confirms its forecast increase in gross domestic product (GDP) of 1.3% this year.

The French central bank announced on Tuesday that it expects a growth of 0.2% of GDP between October and December, a level slightly lower than the rate of 0.3% per quarter observed since the beginning of the year.

This forecast, based on the monthly business survey conducted by the Bank of France among business leaders, is based on a possible decline in activity in November in the building and industry, after a month of October rather dynamic, she said in a statement.

INSEE for its part expected in early October to continue growth at its rate of 0.3% per quarter until the end of the year but the two organizations still meet on an annual forecast of 1.3% .

This level would thus be higher than the average expected for the euro zone (1.2%, according to INSEE), illustrating the resistance of the French economy to the global and European slowdown.

France still benefits from its lower exposure to international trade, and domestic demand remains buoyant, driven by business investment and household consumption, whose morale stabilized in October at its highest level since January 2018 , according to INSEE.

- slowdown in the industry -

However, according to the business survey of the Bank of France, after recovering strength in October, especially in the food and electrical equipment, industrial production could settle in November, business leaders questioned anticipating a slowdown, especially in the automobile.

In its monthly measurement of the business climate, INSEE had noted a decline in the outlook for business leaders in October in the manufacturing industry.

Similarly, if building activity remained strong in October, "growth would be weaker" in November. In services, conversely, after "moderately improving" in October, activity should continue "at the same pace" in November.

But, according to the BdF, what does it mean to lower its annual growth forecast, while the "growth acquis" - that is to say the level that GDP would reach at the end of the year if growth remained zero during the last quarter - was at September 30 of 1.2%.

The French government is still counting on a rise in gross domestic product of 1.4%, after 1.7% recorded last year. It counts in particular on the reforms initiated at the beginning of the five-year period, on the taxation of capital, the labor market or the training, to support the activity.

The fall in unemployment and the measures in favor of the purchasing power of households taken since the end of 2018 should also boost consumption, even if at the moment the rise in household spending remains moderate.

The International Monetary Fund (IMF) was less optimistic, lowering its mid-October growth forecast for France to 1.2%, in the wake of a review of the performance of the global and European economy.

© 2019 AFP