France: Growth prospects have to be revised significantly downwards - Natixis
The sharp increase in companies’ recruitment difficulties in France shows that the unemployment rate is close to the structural unemployment rate, and therefore that growth will return to the level of potential growth, suggests Patrick Artus, Research Analyst at Natixis.
Key Quotes
“Available growth forecasts for France for all the coming years show a growth rate of nearly 2% per year, i.e. practically 0.75 percentage point more than the usual estimates of potential growth in France.”
“Potential growth cannot possibly have increased by 0.75 percentage point in France: all relevant indicators (labour force and youth skills, companies’ modernisation of capital, foreign trade, companies’ capacity to export revealing their level of technological sophistication, etc.) on the contrary explain the low level of long-term growth. It will take several years for the very positive reforms that have been implemented (training, unemployment benefits, education, labour market) to give visible effects.”
“Growth prospects in France will probably have to be revised significantly downwards, which means that the outlook for the fiscal deficit will have to be revised significantly upwards.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
