According to the Bank of France, growth in France will be 0.4% in the first quarter. This is a more favorable estimate than feared.
With the “yellow vests” movement continuing and a noticeable decline in activity since the end of last year, growth forecasts are modest. Nonetheless, with an estimate of 0.4%, the French economy would perform slightly better than in the fourth quarter (+0.3%). The Bank of France, relying on its monthly business survey, attributes this moderate rebound to activity in the construction sector: order books are “very well filled.” In the service sector, while January saw a slowdown, business leaders expect an acceleration in February.
Construction in good shape
Growth in the first quarter will be important economically, of course, but also of great political interest. By putting 11 billion euros on the table in favor of purchasing power, the government expects a rebound in consumption. The measures taken to address the demands of the “yellow vests” are intended to give a boost to consumers’ wallets. According to the OFCE, the gain in purchasing power will be 440 euros on average.
Pessimistic forecasts
Some economists are more cautious: the French might favor saving over consumption. The government still forecasts a 1.7% growth for 2019, despite less optimistic projections from international organizations. The OECD has announced a growth of only 1.3% for France; the Bank of France, on the other hand, is aiming for 1.5%.
