Economic growth in France finally stood at 1.2% in 2019, slightly less than expected by INSEE (1.3%), announced the National Institute of Statistics and economic studies, Friday 31 January.
The end of the year was particularly difficult with activity declining in the last quarter (-0.1%), a first since 2016, in the context of strikes against the pension reform.
Struggling exports, buoyant consumption, although still disappointing, falling unemployment: the French economy posted a mixed performance in 2019. “France is no exception” to the global slowdown, according to Emmanuel Jessua, economist at Rexecode, but it “Held up rather well compared to the rest of the eurozone”, said Eric Heyer, director of the analysis and forecasting department at OFCE.
Despite everything, the Minister of the Economy, Bruno Le Maire, who counted on the same estimate as INSEE (1.3%) underlined this decline over the last quarter “Does not call into question the fundamentals of French growth”.
“This temporary slowdown therefore does not call into question the fundamentals of French growth, which are solid (…) household consumption and business investment are resisting”.
Better resistance than Germany
In this unfavorable environment, France and its economy rather less open than that of its German neighbor for example, whose growth fell to 0.6% last year, remained ” robust “, says in a note Philippe Waechter, chief economist of Ostrum Asset Management.
The French resistance is mainly due to the dynamism of its domestic demand, with household consumption in small increase although still disappointing, significant investments on the part of companies as well as public administrations, a tradition during the years preceding a municipal election.
Companies have benefited from the transformation of CICE into reduced costs which has significantly improved their margins. And household consumption is showing signs of picking up, although the government probably hoped it would increase faster after the measures taken in favor of purchasing power in response to the movement of “yellow vests”. It has increased like never since 2007, also thanks to the fall in unemployment which has greatly increased the total income of French people. “This is an element that should stimulate activity but we realize that the bulk of these measures have not been consumed and that the stimulus may benefit more [à l’économie] in 2020 than in 2019 “, says Eric Heyer.
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