So, where is the economy at ?
Winning the World Cup and bringing home the trophy – perhaps the sporting world’s biggest trophy – is all good and well. But what about those promises of renewed growth and lower unemployment, in short, a better world? Reading today’s issue of Le Figaro Economie instils a certain sense of fear. The financial daily writes: “The slowdown in growth at the start of the year is ‘behind us’, said Banque de France governor François Villeroy de Galhau on Wednesday, deeming the environment ‘more robust than was feared’. Speaking at a hearing before the finance committee of the French National Assembly, he admitted that ‘business activity waned at the start of 2018 both in France and the eurozone’. But ‘this was not a reversal in the cycle but the result of three trends’, namely ‘an acceleration in 2017’, ‘a slowdown in early 2018 that is now behind us’ and ‘stabilisation at a new level of growth’. According to Mr Villeroy de Galhau, the data available on ‘real business activity’ in Germany, both in production and exports point to a ‘reacceleration’ in growth in the second quarter.”
So we’ve made it! Or almost… We are still unable to judge or gauge the effects of this much-promised rebound. Attempting to shed more light on the issue, Le Figaro Economie writes: “In France, the slowdown ‘extended slightly longer into the second quarter, with expected GDP growth of 0.3%,’ said the governor. But from June onwards, ‘business activity rebounded’ and ‘the outlook is trending in the right direction,’ he continued. In its half-yearly macroeconomic forecast published on 14 June, Banque de France reduced its forecast for French GDP this year, from 1.9% to 1.8%.
The downwards revision stems from the clear economic slowdown in the first quarter (with growth of 0.2% compared with 0.7% at end-2017) as well as poor results in spring, both in industrial production and consumption.”
The article continues: “Growth should remain ‘solid in 2018’, said Mr Villeroy de Galhau, talking about a range of ‘between 1.7% and 1.8%’. He added that ‘remarkable convergence has been observed’ on the part of the main international bodies in this respect. Despite the first-quarter results, the French government has thus far refused to make a downwards revision to its growth forecast, currently standing at 2%. ‘That remains our objective, but it’s all about will,’ said Economy Minister Bruno Le Maire in late June.” We may well be world champions, then, but we are not out of the woods just yet.