France: Catch up if you can – BNPP

Research Team at BNP Paribas suggests that if we keep Frances quarterly volatility aside, the economy is just growing around its potential as the survey data suggest a rebound is likely in Q4, with consumption and investment recovering from their poor readings in Q3 and for the whole year, they see growth of 1.3%.

Key Quotes

“We expect growth will still struggle to accelerate next year, mainly because private consumption is likely to be dragged down by the energy-led rise in inflation and the ensuing weaker gains in purchasing power.”

“Prospects for a rise in exports are limited, thanks to modest global growth and the delayed impact of the less favourable euro effective exchange rate since April 2015, adding to weak competitiveness. Business investment should rise modestly.”

“For 2016, the consensus now agrees with our low growth estimate. For 2017, we are less optimistic than consensus on private consumption in particular: we expect it will be hard hit by higher inflation, with limited support from job gains and wages growth.”

“Downside risk is fed by an uncertain environment (external and domestic, economic and political). Overall, though, risks seem tilted upwards in 2017, thanks to potentially better construction and employment figures and less tight fiscal policy.”