French GDP growth is showing clear acceleration. In 2017, it is likely to average 1.6% over the year (from 1.1% in 2016), a figure that has been upgraded thanks to a robust carry-over and solid economic trends: confidence surveys have improved markedly, employment is growing strongly, unemployment is falling, and the real estate market is in much better shape. Monetary and financial conditions remain favourable. Global growth is firming up. Exports and investment promise to be the engines of growth in 2017, whilst household spending will slow down under the influence of rising inflation. However, inflation is still low, and continues to be held down by the persistence of substantial excess capacity in the economy.
In the space of just two months, the outlook for French GDP growth in 2017 has improved significantly. In April, growth was expected to accelerate slowly, to an average of 1.4% for the year, from 1.1% in 2016. At the time, this forecast was in line with the consensus. At the beginning of June, our updated forecast predicted stronger acceleration, to 1.6%. This figure, which we share with INSEE, is at the upper end of the consensus range. If it proves accurate, this will represent the strongest growth since 2011, after two years of virtual stagnation (0.2% in 2012 and 0.6% in 2013) and then three lacklustre years (1% in 2014 and 2015, 1.1% in 2016). Such a performance would also eliminate a fair chunk of the growth differential with the eurozone (expected growth of 1.9%, from 1.7% in 2016).
■ Stronger growth
What has changed in the meantime? First, the performance so far, and the automatic impact of a stronger carry-over following the upgrading of first quarter growth, at the end of May, by 0.2 percentage points (from 0.26% q/q to 0.45% q/q 1 ). Secondly, a series of good indicators has helped confirm the underlying trend: a marked improvement in May’s confidence surveys; a sharp drop in the unemployment rate, and another solid increase in payroll employment in the first quarter.
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Hélène BAUDCHON