France Country Risk Report Q3 2016 - New Market Study Published

From: Fast Market Research, Inc.
Published: Mon May 09 2016

French economic growth will lag the rest of the eurozone over the next two years as investment growth and external demand remain lacklustre. Meanwhile, meagre wage growth and high unemployment mean that household consumption - traditionally the key driver of the economy - will become less able to support growth.

France will experience a temporary terms of trade boost in 2016 and 2017 which will keep its trade deficit from expanding significantly. Beyond 2017 we expect the structural inefficiencies of the French economy to result in an expansion of its trade and current account deficits.

While France will benefit from a cyclical economic upswing in the eurozone, it is too early to tell if improving economic conditions will be enough to save President Francois Hollande from elimination in the first round of the presidential election.

We expect the 2016 budget, which is the last to be submitted by Hollande before the presidential election, to fall short of its deficit reduction targets as expenditure cuts are insufficient to outweigh the proposed tax cuts.

Full Report Details at

Although we are likely to see a gradual increase in positive rhetoric towards structural reforms, Hollande is unlikely to become an ambitious reformer of the French model. While we expect some reformers will take baby steps in the right direction, the ability of Hollande to implement sweeping reforms will be restrained by divisions within his own party and core support base.

Changes To Forecasts:

We maintain our current GDP forecasts for 2016 and 2017.

Key Risks:

Although the far right party, the Front National (FN) led by Marie Le Pen, failed to win any region in France's regional elections in December 2015, France's political spectrum is increasingly shifting towards the right and anti-EU rhetoric will become louder.

France's rigid labour market and high unemployment continues to constrain economic growth, preventing higher private consumption growth rates and continues to damper fixed investment.

Current account balance, % of GDP -0.1 -0.3 -0.5 -0.5

Assess your risk exposure in France with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in France with confidence.

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