France

RGE's Q1 2010 France Outlook

While the French economic recovery continued in Q3 2009, no acceleration in the growth momentum is expected to occur in 2010. In Q3 2009, French GDP grew 0.3% q/q, largely on the back of favorable net exports. Domestic demand, however, proved fragile with investment continuing its downward trend of previous quarters and private consumption stagnating for the first time since early 2008. France weathered the economic crisis much better than other major EU economies due to resilient private demand and limited reliance on the external sector. This approach turned out to be a valuable hedging strategy as it partially sheltered the French economy from the slowdown in global economic activity, thereby moderating the economic contraction. In addition, the large public sector helped stabilize the economy. As a result, RGE expects annual French GDP to decline a mild 2.2% in 2009, in line with the October forecast. Thereafter, the recovery will continue with the economy registering sustainable—albeit moderate—growth rates. Private consumption, the main pillar of the French economy, will continue to drive growth in 2010, but with constrained momentum due to rising unemployment, accelerating inflation and fading government stimulus packages.

Read the Q1 2010 France Outlook.