Despite the slowdown in the economy, France is holding up better than its neighbors in the eurozone. For the first time since 2014, its growth is above the average for the euro area countries.
With the uncertainties on the Brexit, the escalation of trade sanctions between the United States and China but also the changes of standards in the automotive sector have led to a particularly violent economic downturn in the euro zone, particularly in Germany and in Italy. France is not immune to this degradation.
According to the OFCE, the French economy saw its growth rise from 5.7% in the second quarter of 2017 to 1.3% in the second quarter of 2019, the slowest pace since the end of 2012. Same thing for French exports of which the volume has been halved in a year and a half.
And yet, France should be the first contributor to growth in the euro area this year. The good resistance of domestic demand explains this performance.
The measures taken by the government to respond to the Yellowknaps crisis (12 billion euros) and the dynamism of the wage bill driven by the creation of jobs should allow the purchasing power of households to increase by 2, 4% in 2019, its biggest increase since 2007. According to the OFCE, the purchasing power per household should increase by 800 euros in 2019.
A more pronounced slowdown in 2020
However, the year 2020 may be a little more difficult to negotiate in France with growth of 1.3%. OFCE now anticipates an increase in purchasing power of 310 euros per household on average.
At the same time, job creation should slow down. The OFCE expects 125,000 in 2020, almost twice as much as in 2019. In these conditions, the French, despite low interest rates, should continue to save as a precaution.
On the side of the French companies, the OFCE foresees a strong slowdown of the investments in 2020. This would be explained by a fall of the demand and the exports. The OFCE, however, does not expect a recession in Germany or the United States next year.