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The housing market saw a marked recovery in both 2016 and 2015. The number of transactions rose by 5% in pre-owned and saw a further very sustained increase of 17% in new-build. Prices are picking up once more, although modestly, rising by 1.7% over 12 months in pre-owned in Q3 2016. However, this boom is not quite comparable to a traditional cyclical rebound, and features some weaknesses. In 2017-2018, we lean towards a scenario featuring a slight rise in 10-year OAT rates and lending rates, leading to a slowly declining trend on the market.
Despite an uneven growth profile in 2016, the French economy's growth rate finally looks set to come out at 1.1%. Looking ahead, growth is forecast to accelerate modestly. External support factors will continue to have an overall positive impact, even if oil prices and interest rates are starting to edge upwards. In addition, the positive impact of several economic policy measures bear out our growth forecast, whose dynamism is nevertheless restricted by persistent structural constraints.
This publication presents the economists' forecasts for interest rates, exchange rates and commodity prices, along with the Crédit Agricole Group's central economic projection.
Clearly, the geopolitical, political and economic risks facing the world are many and multifarious. And it's no easy matter to isolate those that seem most apparent to us. In this respect, a sudden tightening of financial conditions does not yet seem an imminent danger. While 2017 is not looking as if it will be the year of living dangerously, 2018 could well be more fraught.
The housing market has been experiencing a marked rebound since early 2015. Transaction numbers grew 15% in 2015. In mid-2016, cumulative 12-month totals were again up by about 15% and are nudging the high points of the previous, 2004-2007, cycle. Prices have started rising again, even if the trend is still modest. That said, the ongoing boom is fairly atypical, with some clearly upside factors, but also some persistent weaknesses.
We are expecting a slight improvement in economic growth in 2016, with volume GDP growth of 1.3%, compared with 1.2% in 2015 (slightly below the Eurozone average), a rate that should continue through into 2017.
The public deficit forecast for 2017 has been set at 2.7% of GDP (3.3% in 2016), with growth forecasts of 1.5% in 2016 and 2017 – slightly higher than the consensus. The public debt ratio is forecast to fall very slightly in 2016 already. The structural effort will again be significant and concentrated on public spending, whose growth in value terms has been markedly slowed. Our own deficit forecast is slightly higher that the government's, at 2.9% of GDP in 2017.
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