the estimate revised downward


Orange with AFP-Services, published on Wednesday, October 16, 2019 at 19:23

As household consumption has not increased enough, the French Observatory of Economic Conditions (OFCE) has lowered its growth forecasts from 1.5% to 1.3%.

French growth will not be as high as expected. The French Observatoire des conjonctures economiques has lowered its estimate.

After a growth of 1.7% recorded in 2018, the OFCE expected 1.5% for 2019. Finally, the independent body predicts a growth to 1.3%.

A forecast revised downward because of household consumption that does not take off. Stagnation despite rising purchasing power, and exports remaining penalized by the global slowdown. In its previous forecast, in April, the French Observatory of Economic Conditions forecast growth of 1.5% this year after 1.7% recorded in 2018, but "the beginning of the year was a little lower than expectations" said Mathieu Plane, an economist at the OFCE, during a press conference.

For 2020, the Observatory forecasts an increase in gross domestic product of 1.3%, then 1.2% in 2021. Despite this expected slowdown, France will do better than the average of the euro zone, unprecedented since 2014 And since 2004, the country has become the leading contributor to European growth.If the French economy resists better than its neighbors to a world context full of uncertainties, it is mainly thanks to its domestic demand, driven in particular by purchasing power measures taken in response to the movement of "yellow vests".

Their effect should be felt this year and next, before weakening in 2021, with a "more restrictive" expected fiscal policy.

More savings

However, if the purchasing power of households is expected to grow by 2.4% this year (+800 euros on average per household, mainly driven by the dynamism of the labor market), its largest increase since 2007, this growth did not materialize as much as the OFCE had predicted it on consumption during the first semester.

Even though household sentiment has improved in recent months, they have instead chosen to save more, illustrating "probably" a wait-and-see attitude "in relation to the" yellow vests "movement or the upcoming reforms of the pension system. of unemployment insurance, "says the OFCE. The Observatory forecasts a "moderate" rise in consumption in the second half of the year.

On the business side, investment will also support growth, while job creation will remain high in 2019 (+260,000), before declining in 2020 and 2021, allowing the unemployment rate to fall to 8.3 % at the end of 2019, 8.2% at the end of 2020 and 8% at the end of 2021.

The OFCE notes that the resistance of the French economy is also at the expense of European budgetary rules, with a reduction in the public structural deficit below the recommendations. The public deficit will exceed 3% of GDP this year (3.1%), before an expected decline to 2.3% in 2020 (when the government expects 2.2%) and 2% in 2021.

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