Unexpected resistance and hope for the second part of 2019: thus can be interpreted the trends delivered this Thursday by the National Institute of Statistics and Economic Studies (INSEE) on the French economy.
With a growth of + 0.3% in the second quarter – the same figure as the first – the trend remained positively oriented, while the euro area average stagnated at 0.1%.
Money is cheap, morale is good
According to INSEE, this increase in wealth in the second quarter was achieved thanks to a good momentum in business investment (+ 0.9%) but also in households (+ 0.8%). Low interest rates encourage investment.
But this is not the only explanation: the order books of the companies remain correct and after the depression of the yellow vests crisis, morale has been rising since April as measured by INSEE.
France is not dependent on its exports
This is the difference with the German economy, sluggish at the beginning of the year and threatened with recession at the end of the year because of the Sino-US trade war and the slowdown in international trade.
The French domestic market remains strong for companies and our flagship export – aeronautics, luxury, some parts of the agri-food – escape this war.
And if the consumption restarted?
This is the dark spot of the second quarter. The first measures of the government in favor of the purchasing power (December 2018) filled the bottom of wool more than the coffers of the businesses. The savings rate was 14.9% and household spending rose only 0.2% between April and June.
On the other hand, they rebounded by 0.4% for the month of July alone, driven by housing equipment and transport (holiday effect?). "The gains in purchasing power often take time to translate into consumption: the French will end up consuming" prognosis economist Philippe Waechter.
The Minister of Economy Bruno Le Maire is still on a target of 1.4% for the end of the year. The recovery in consumption, the maintenance of low interest rates, the stabilization of oil prices and the good tourist season give reason to hope. But the French do not have all the keys. If growth continues to decline in the euro area, our economy will inevitably be affected.