Macron faces below-expected economic growth – The Economic Journal

Macron faces below-expected economic growth - The Economic Journal


After growing 0.2% in both the first and second quarters, the French government of Emmanuel Macron assumed the prospect that the Gallic economy would produce a 0.5% jump in the third quarter, but known values ​​this Tuesday indicate that they were not more than 0.4%. The news is not good for the president, who faces a wave of defiance of some of his decisions, the "dismissal" of several ministers and, consequently, the end of the state of grace with which he arrived at the Elysee Palace.

Analysts in the French economy, including the Bank of France, forecast a 0.5% growth in the third quarter, which was not confirmed. The growth of the French economy is boosted by domestic demand and particularly by the increase in household consumption, and also by exports.

Consumption, which fell 0.1% in the second quarter, recovered 0.5% between July and September, at the expense of the services sector. Better is corporate investment, which showed a strong increase (up 0.8% in the third quarter, after rising 0.9% in the second quarter), particularly in IT and the automotive sector.

The improvement in foreign trade, which strongly penalized the activity at the beginning of the year, seems to be emerging: between July and September, trade with the outside, the Achilles heel of the French economy, contributed positively to the growth, reaching 0, 1%, after showing a negative growth of 0.2% in the previous quarter.

The economic recovery was widely anticipated by economists and the government, which said it expects the third quarter to resume business after the downturn in the first half.

However, this growth is considered insufficient to allow the French economy to return to this year's growth levels of 2017 (2.2%). The forecasts are now that at the end of 2018, France will reach a growth of 1.6% – according to the Bank of France, which is less optimistic than the government – still 'clinging' to the hypothesis of an expansion of 1.7 %.

In 2017, the French economy managed to grow quarterly always above a minimum of 0.6%, an amount that has not yet been reached in any quarter of 2018, so growth will necessarily be below that of last year. The last quarter in which the French economy shrank was the second quarter of 2016 – but the news is not great for Emmanuel Macron, in a context where the European Union's general expects the slowdown in growth at the end of 2018 when compared with 2017.



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