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Kiel - 16th March 2010

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

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  1. France Economic Outlook by Alain Henriot Delegate Director, Coe-Rexecode Kiel - 16th March 2010

  2. 1 - A better resilience of the French economy to the crisis than other Euro area countries

  3. 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

  4. 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?

  5. 2 – What can we learn from business surveys?

  6. What can we learn from surveys? (2)

  7. What can we learn from surveys? (3)

  8. 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?

  9. 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

  10. 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.

  11. Which engines for economic growth? (3) 3. Investment: the low level of capacity utilisation will hamper the recovery in investment INSEE survey

  12. 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

  13. 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.

  14. 4– What prospect for the labour market?

  15. In France, productivity per employee has already returned to the pre-crisis level

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

  17. Forecast 2010 -2011

  18. In conclusion : has the crisis hit the long-term outlook? …

  19. … probably yes !

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