France Economic Outlook by Alain Henriot Delegate Director, Coe-Rexecode. Kiel - 16th March 2010. 1 - A better resilience of the French economy to the crisis than other Euro area countries. What is behind this resilience ?. Lower exposure to industry
by Alain Henriot
Delegate Director, Coe-Rexecode
Kiel - 16th March 2010
Phase 1: a global crash (mid-2008 – early 2009)
Phase 2: a strong upturn in the car industry (thanks to public support schemes in many European countries) triggering the supplying industries (2nd and 3rd quarters 2009) ; In the meantime the activity in other sectors (equipment goods) is stabilising at a very low level (-25 % compared to the pre-crisis level)
Phase 3: Beginning of a downturn in the car industry production coupled with a moderate increase in activity on other industries (2009Q4 -2010 Q 1)
Forthcoming: strengthening global output or aborted recovery?
To sum up, Coe-Rexecode indicator assesses underlying growth at around 1.2% in February against 2.3% three months ago: is it the sign of a slowdown of economic growth?
1. Inventories: in the industry, the level of inventories is now considered as very low, it can help to support future stock building
2. Private consumption: in 2009, households real disposable income was supported by disinflation. It will not be the case anymore in 2010. Since the beginning of 2010, the planning end of the wreckage premium has been weighing on car sales.
3. Investment: the low level of capacity utilisation will hamper the recovery in investment
4. Exports: a relief thanks to the depreciation of the Euro in a context of a rather strong world demand
Export performance: export volumes/world demand addressed to France
Price competitiveness: national export prices/export prices of competitors
5. Public investment: it was rather weak in 2009, despite growth support schemes. It was the result of the cities electoral cycle.