Fitch keeps the prospect at "stable"

The structural reforms of President Macron could strengthen "growth potential," said the rating agency which warns however face "social tensions" in the country.

The World with AFP Posted on January 19th, 2019 at 00h14

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"Yellow vests" in front of the Ministry of Finance, Bercy, January 12.
"Yellow vests" in front of the Ministry of Finance, Bercy, January 12. BERTRAND GUAY / AFP

The financial rating agency Fitch held Friday, January 18 at "Stable" the outlook for the long-term sovereign debt rating of France, currently AA.

"In response to the explosion of social tensions in November, characterized by the "manifestations of yellow vests", President Macron has adopted a more conciliatory political stance, launching public consultation on political and economic issues and implementing tax measures "says the agency in a statement.

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"Uncertain magnitude"

Fitch's assessment of medium-term growth in the French economy remains unchanged at 1.2%. "The implementation of President Macron's ambitious structural reform agenda, launched shortly after the 2017 elections, could significantly enhance growth potential", says Fitch. "However, the scale of the impact remains uncertain, given the higher social tensions"she adds.

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"Because of the tax relief measures, the budget deficit will exceed 3% of GDP in 2019, just two years after France had corrected its decade" deficit, Fitch noted, noting that "However, these tax relief measures will be limited to about 10 billion (0.4% of GDP)". The agency forecasts a budget deficit of less than 3% of GDP in 2020.

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