Report
2019 will be a decent year for the French economy but for the wrong reasons which will not repeat
The year 2019 is likely to be decent for France, but for reasons that are neither satisfactory nor sustainable: The increase in the fiscal deficit, due to the increase in transfer payments to households and tax cuts, applies only to 2019. The fiscal deficit will have to be reduced in subsequent years; The acceleration in wages, due to government incentives and companies’ hiring difficulties. But it is eroding competitiveness; The fall in inflation under the effect of the fall in oil prices, which are expected to pick up in 2020; The small weight of industry in France, which is one of its major structural problems, but which in 2019 is sheltering it from the cyclical downturn in global industry. All this shows that while 2019 will be quite a good year for French growth, 2020 is likely to be much more difficult .
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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