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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

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kiel 16th march 2010

France Economic Outlook

by Alain Henriot

Delegate Director, Coe-Rexecode

Kiel - 16th March 2010

what is behind this resilience
What is behind this resilience ?
  • Lower exposure to industry
  • Sectoral specialisation led to a less pronounced downturn in industrial production in France than in other Euro area countries
  • The share of the public sector in the economy has contributed to soften the decline of activity
Different phases in the recovery process :

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?

3 which engines for economic growth
3 – Which engines for 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


Which engines for economic growth? (2)

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.


Which engines for economic growth? (3)

3. Investment: the low level of capacity utilisation will hamper the recovery in investment

INSEE survey


Which engines for economic growth? (4)

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


Which engines for economic growth? (5)

5. Public investment: it was rather weak in 2009, despite growth support schemes. It was the result of the cities electoral cycle.

Temporary jobs have been back on a rising trend, but it is probably the result of higher demand in the car industry