Download France Economic Outlook 2010-2011 - Coe

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
GDP (in volume terms)
quarter-on-quarter, %
GDP (in volume t erms)
6
y-o-y, %
1.5
1
4
0.5
0
2
-0.5
-1
Euro area
France
0
-1.5
France
Euro area
-2
-2.5
-2
-3
-4
-6
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
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• 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
-3
•
Different phases in the recovery process
:
Industrial production index
120
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?
20 5=10
110
100
90
80
Manufacturing
Manufacture of fo d products
and beverages
Electri cal and el ectronic equipment;
machi ne equipment
Manufacture of transport equipment
Other manufacturi ng
70
2005
2006
2007
2008
2009
2010
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2 – What can we learn from business surveys?
France
Industri al Confidence Indicator
Eur opean Commis sio n
15
PMI in dex - Reut er s
Balance in %
65
60
0
55
50
-1 5
45
40
-3 0
35
-4 5
30
90
92
94
96
98
00
02
04
06
08
10
97
98
99
00
01
02
03
04
05
06
07
08
09
10
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•
What can we learn from surveys? (2)
France
Service Confidence Indicator
European Commis sio n
30
PMI in dex - Reut ers
Balance in %
70
65
15
60
0
55
50
-1 5
45
-3 0
40
90
92
94
96
98
00
02
04
06
08
10
97
98
99
00
01
02
03
04
05
06
07
08
09
10
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•
What can we learn from surveys? (3)
France
Construction Confidence Indicator
European Commis sio n
40
Balance in %
20
0
-2 0
-4 0
-6 0
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
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•
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?
France
Underlying growth
6
% annual rate
4
2
0
-2
-4
-6
2001
Low phase of the growth cycle
Recession
2002
2003
2004
2005
2006
2007
2008
2009
2010
-8
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
France: monthly business survey
(goods-producing industries)
Finished-goods inventory level
Change in inventories: contibution to GDP growth
2
1.5
30
Balance s. a, in %
1
25
0.5
0
20
-0.5
15
-1
-1.5
10
-2
5
-2.5
January April 2008 July 2008
2008
October
2008
January April 2009 July 2009 October
2009
2009
0
2005
2006
2007
2008
2009
2010
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France
Germany
-9
•
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.
France
Households real disposable
Con sumpt io n in man uf act ur ed goods
%
8
23
Chained bil ion euros
3.7
Manufactured goods (LHS)
Automobiles (RHS)
6
22
3.5
21
3.3
20
3.1
19
2.9
18
2.7
4
2
0
-2
y-o-y, %
quarter-on-quarter, %
-4
-6
17
2002
2003
2004
2005
2006
2007
2008
2009
2010
2.5
02
03
04
05
06
07
08
09
10
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•
Which engines for economic growth?
(3)
3. Investment: the low level of capacity utilisation will hamper
the recovery in investment
France
Capacity Utilization Manufacturing
90
%
86
82
78
74
70
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
INSEE survey
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•
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
France
130
2005=100
120
110
100
90
Export performance
Price competitiveness
80
70
2002
2003
2004
2005
2006
2007
2008
2009
Export performance: export volumes/world demand addressed to France
Price competitiveness: national export prices/export prices of competitors
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•
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.
France
GFCFGeneral government
%
12
y-o-y, %
quarter-on-quarter, %
9
6
3
0
-3
-6
-9
-1 2
2002
2003
2004
2005
2006
2007
2008
2009
2010
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4 – What prospect for the labour market?
France
Emplo ymen t - pr iv at e sect or
200
Un emplo ymen t
Quarte rl y changes - th ousands of pers ons
12
%
3.5
11
3.2
10
2.9
9
2.6
100
0
-1 00
8
2.3
Unempl o yment ra te (L HS)
Unempl o yed (th ousands of pers ons) (RHS)
-2 00
7
91
93
95
97
99
01
03
05
07
09
11
2.0
91
93
95
97
99
01
03
05
07
09
11
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•
In France, productivity per employee has
already returned to the pre-crisis level
USA
Euro area
2008q1=100
106
2008q1=100
102
104
100
102
100
98
GDP
Employment
Producti vi ty
98
94
96
GDP
Employment
Producti vi ty
96
1
2008
2
3
4
1
2009
2
3
4
1
2010
94
1
2008
2
3
4
Germany
1
2009
2
3
4
1
2010
2
3
4
1
2010
France
2008q1=100
102
2008q1=100
102
100
100
98
98
96
GDP
Employment
Producti vi ty
94
92
1
2008
2
GDP
Employment
Producti vi ty
96
3
4
1
2009
2
3
4
1
2010
94
1
2008
2
3
4
1
2009
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•
Temporary jobs have been back on a rising
trend, but it is probably the result of higher
demand in the car industry
France: temporary jobs
500
Thousands of persons
450
400
350
300
250
1
2005
2
3
4
1
2006
2
3
4
1
2007
2
3
4
1
2008
2
3
4
1
2009
2
3
4
1
2010
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• Forecast 2010 -2011
2009
2010
2011
GDP
-2.2
1.7
1.4
Private consumption
0.8
0.9
0.8
Total investment
-7.0
-1.1
2.4
Of which: business investment
-7.7
-0.8
2.5
Residential construction
-8.1
-3.5
1.7
Inventories change (contribution to GDP, %)
-1.4
0.8
0
Exports
-11.2
4.5
5.0
Imports
-9.7
4.3
4.5
Inflation (annual average, %)
0.1
1.2
1.0
Current account balance (% GDP)
-2.0
-2.1
-2.2
Public deficit (% GDP)
-7.9
-7.8
-6.9
Unemployment rate (average level, %)
9.1
9.9
10.0
Annual change (%) unless otherwise stated
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•
In conclusion : has the crisis hit the long-term outlook? …
GDP in level terms
Level of potential output
revised downward
but potential growth is not revised
after an intitial adjustment
Level of potential output
and
potential growth
are revised downward
A traditional cycle
with an unusual magnitude
Potential output unchanged
the output gap has to be closed
Strong growth to be expected
Crisis
- 18
•
… probably yes !
France GDP (in volume terms)
1700
Chai ned bi l ions of euros at an ual rate
1650
1600
1550
1500
1450
2002
2003
2004
2005
2006
2007
2008
2009
2010
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