Friday, October 28, 2016

Why the French growth is still amorphous – The World

The gross domestic product (GDP) grew 0.2 % in the third quarter, after the decline unexpected economic activity recorded in the second quarter (0.1 per cent).

The World | • updated | By

After a decline of 0.1 % in the second quarter, economic growth in france recorded a slight increase of 0.2 % in the third quarter, according to figures published on Friday 28 October by the Insee. While the institute is predicting growth of gross domestic product (GDP) of 0.4% in the fourth quarter, the goal of 1.5 % growth at the end of the year, which was the government, seems to be moving away. The minister of economy and finance, Michel Sapin, acknowledges that it will be ” hard to reach “. At the beginning of October, already, after a long time camped on the line of the 1.5 %, it had seemed to change his stance by admitting that ” we will be at around 1.5 % “. Insee believes that the growth should not exceed 1.3% in 2016.

” An unemployment rate of 9.5% at the end of the year seems to me to be quite reasonable, ” Michel Sapin, minister of economy

” This does nothing to alter our fundamental goals “, points out, however, Mr. Fir, joined by The World. The minister maintains the goal of reducing the deficit to 3.3 % at the end of the year. the ” We are fully in line, at this point, with our forecast of revenue and expenditure, “, he insists. the ” This does not call into question either of our goals on the front of unemployment, he continued. in The characteristic of this revival, even if it remains too modest, is that it is richer in jobs. Around 1,2-1,3 %, we begin to create employment. An unemployment rate of 9.5% at the end of the year seems to me to be quite reasonable. “

Swings erratic

It remains, nevertheless, even if the number of job seekers in category A registered with the employment agency has recorded a dramatic decline (– 66 300) in September and even if the Insee provides 130 000 jobs this year in the private sector, that the economic activity remains slow and poor. All the components of GDP appear to be, in turn or simultaneously, affected by swings erratic.

Thus, in the third quarter, the total production of goods and services registered a slight rebound of 0.4 %, after a decline of 0.2% in the previous quarter. It will restart in the services (+ 0.6 percent) after suffering an air hole to the second (– 0,1 %). The manufacturing production is picking up (+ 0.5 percent) after a decline of 0.1 % in the previous quarter, but is experiencing a net decline in the areas of material transport (– 3.3 %) and energy (– 2,7 %).

Read also : The historical decline in unemployment in September, reassured the government

The good news is, this is the restart of production in construction : + 1% – 0,4 %. According to the indicator published on Friday by the ministry of housing, starts of new houses have registered a rise of 7.4 % from July to September compared to the same period in the previous year. For their part, the building permits granted for new housing jumped by 17.3 % over the three months. Sign of the dynamism of the current construction, the average time for the opening of a yard of single-family homes fell to 4.7 months against a long term average of 5.2 months. It is 8.1 months for collective housing against a long average of 10.7 months.

If the total production is recovering, household consumption remains slack. Purchases of manufactured goods, in particular, recorded a sharp decline : – 1.1% after + 0.2% in the second quarter. This decline is particularly marked for the equipment of the accommodation : – 5.9 per cent after two quarters of very strong growth.

foreign trade weighs on the GDP

The investment, after stagnating in the second quarter, restarts slowly (+ 0.3 per cent). This increase was particularly marked in the construction, which increases by 0.9% after a slight decline of 0.1 % in the previous quarter. Capital expenditures in market services are recovering as well (+ 1,1 %). On the other hand, they regress sharply (– 2,3 %) as regards the manufactured goods.

The more strong degradation of the components of the GDP focuses on the external trade. In the third quarter, if the imports have rebounded strongly (+ 2.2% after – 1.7% in the previous quarter), exports, and they, have been only moderately supported (+ 0.6% after + 0.2 per cent). In total, points to the Insee, the foreign trade accounts for – 0.5% of GDP on the activity of the third quarter after having contributed 0.6 points to the support of the previous quarter.

The economic activity in France was therefore difficult to show positive results over time and to turn on simultaneous green lights in its different components. Even if the minister of economy and finance continues to repeat ” there she is, the growth, it is there “, she continues to play hide-and-seek. Several cyclical elements are involved, however, to explain the difficulties of the French economy to return to sustained growth.

The strikes of spring, first of all, have led to a slowdown of production in some sectors, including the refineries, and also encouraged the habit of caution among business owners, which probably explains why the investment may not be as dynamic as envisaged by the government. The latter, however, continued to believe that they are going to find a trajectory of sustained upward.

The goal of a 1.5% growth at the end of the year, weakened

The French economy, then, pays tribute to non-negligible in the attacks committed on the territory for a year. The tourist activity, in particular, recorded a dramatic decline. The tourist traffic has fallen 7 % since the beginning of the year, particularly marked in Paris and its region. Finally, the situation deteriorated in agriculture and poor crops of the year are also significant in the results displayed in the third quarter.

If this result of 0.2% in the third quarter weakens the goal of 1.5 % at the end of the year, could he give in due to the fiscal outlook announced by France in the document that was sent to the european Commission ? While the latter has expressed reservations on the draft passed by several countries, including Spain and Italy, ” France has not been considered to give additional information “, said Mr. Sapin. the ” I’m not worried, “, he says.


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