French cen­tral bank trims growth out­look

The Gulf Today - Business - - FRONT PAGE -

PARIS: France’s econ­omy is set to grow 1.6 per cent an­nu­ally through to 2020 as un­em­ploy­ment steadily falls, the cen­tral bank fore­cast on Fri­day, trim­ming slightly its pre­vi­ous growth out­look.

The Bank of France had pre­vi­ously fore­cast growth of 1.8 per cent in 2018 and 1.7 per cent in 2019, but said the first half of this year was weaker than an­tic­i­pated and for­eign de­mand was now ex­pected to be softer than pre­vi­ously ex­pected next year.

With its up­dated out­look, the cen­tral bank is more pes­simistic than the govern­ment, which is bas­ing its 2018 bud­get on the as­sump­tion the econ­omy will grow 1.7 per cent this year and next year.

The out­look also in­di­cated France is likely to lag the broader euro­zone af­tertheeu­ro­pean­cen­tral­bank­fore­cast on Thurs­day that the bloc would grow 2.0 per cent this year, 1.8 per cent in 2019 and 1.7 per cent in 2020.

“France is still lag­ging on growth be­cause France is still lag­ging on re­forms,” Bank of France gover­nor Fran­cois Villeroy de Gal­hau told Europe 1 ra­dio.

Villeroy added that while France had re­cently car­ried out im­por­tant re­forms, there re­mained a lot to do to rein in spend­ing.

In the cen­tral bank’s out­look, un­em­ploy­ment was seen grad­u­ally fall­ing from 9.1 per cent in the sec­ond quar­ter to 8.3 per cent by the end of 2020, the low­est level since the end of 2008, as the global fi­nan­cial cri­sis was break­ing out.

As un­em­ploy­ment fell and house­holds’ pur­chas­ing power picked up, con­sumer spend­ing was ex­pected to rise over the com­ing years, help­ing to off­set slower busi­ness in­vest­ment.

Mean­while, in­fla­tion was ex­pected to peak this year at 2.1 per cent fol­low­ing higher en­ergy prices, be­fore eas­ing back to 1.7 per cent in 2019 and 1.8 per cent in 2020. (Re­port­ing by Leigh

Reuters

Peo­ple gather out­side the BFC Shows­pace for Lon­don Fash­ion Week Women’s on Fri­day.

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