Welcome to the web site of Economic Research
France faces many difficulties, including a structural competitiveness deficit, high unemployment, and low corporate profitability. These limitations are likely to hamper France's post-crisis growth rebound. Yet the French economy has no shortage of good points above and beyond its well-known dynamic demographic.
The ECB defeated our (out-of-consensus) forecast of a rate cut today, choosing not to react to the latest drop in inflation. At the same time, the tone of the press conference was very dovish, with the Governing Council "unanimous in its commitment to using also unconventional instruments in order to cope with risks of too prolonged period of low inflation", including via negative rates, liquidity measures or QE.
One shouldn't always extrapolate from the recent past. Markets and economists seem to agree that the disappointment early this year regarding the improvement in global economic conditions will be short-lived. The "managing of expectations" by central banks is proving more complicated than expected. Geopolitical risk is higher. There is still no sign of volatility disappearing from the markets!
Historically, domestic demand, especially household consumption, tends to lead recoveries in the UK. Net trade tends to be a muted contributor, making a major contribution only after exchange rate depreciations. The recent recovery does not escape key historical patterns. It has been driven to a major extent by consumer spending while net trade has been weak. Dwellings investment accounted for around one-tenth of growth last year – higher than its share in the level of output.
The recovery is under way in Spain, even if fundamentals remain fragile. GDP is expected to progress by 0.9% in 2014, boasted by a strong carryover effect from end 2013. Survey data has been encouraging since the beginning of the year. The drag from fiscal adjustment and bank sector restructuring will be much less pronounced in 2014.
ECO Focus – Edition April 17, 2014
France: breakdown of public spending by function
Weekly, monthly, quarterly, aperiodic... all the economic information at your own pace!