Fears about French growth are confirmed. According to the latest bulletin of the Banque de France published on Friday, January 11, gross domestic product (GDP) slowed to 0.2% in the last quarter of 2018 marked among other things by the movement of "yellow vests" and a braking activity in its European neighbors. The banking institution, which initially forecast an increase of 0.4%, had already revised downward growth forecasts for the period from October to December. These projections are in line with those of INSEE, which also forecast a slowdown in the French economy at the end of the year.
For this weekend, the authorities fear a mobilization "stronger" and "more radical". For this Saturday, the head of the national police, Eric Morvan, anticipates "we can return to a level of mobilization that is before the Christmas holidays". December 15, the movement had gathered 66,000 people throughout France, according to official figures regularly challenged by the "yellow jackets". A few days before the big debate, the pressure rises on the executive who must face an air hole of the economy tricolor while the crisis of "yellow vests" lasts for more than eight weeks.
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The suffering industry
In detail, the results collected by the Central Bank indicate that industrial production declined steadily between August and November. Order books have deteriorated over this period. In November, production in the industry as a whole fell by 1.3% compared to October and over a year, it declined by 1.2% according to the latest figures from INSEE published this Thursday.
Despite the bad news, industrial production should regain strength in December according to the industrial entrepreneurs interviewed by the Bank of France. In details, "Aeronautics, the agri-food industry and the automobile are the most dynamic, while textiles are more affected by social movements than in November." For the month of January however, leaders anticipate a significant shift in production.
As for market services, the business climate also declined in October and November before rebounding in December. In accommodation and food services, the results point to a deterioration of the business climate for November and December, even though it had started well before.
With respect to transportation and warehousing, the activity was clearly affected in November. Several strikes have been recorded in Total refineries but the sector's growth has clearly rebounded for the last month of the year. Finally, for business services, activity remained dynamic. In contrast to their counterparts in the industry, business leaders in the services sector are expecting an acceleration of activity in January. With regard to the building, activity has resumed, especially in the structural work and faced with fairly well-filled order books, industry professionals expect continued growth in activity in January.
Drop in the arrival of tourists
The escalation of violence between some people and the police during the mobilization of "yellow vests" has cooled a number of foreign tourists. According to Atout France, the French tourist promotion agency abroad cited by theMore Bank there was a decline in international air bookings in Paris in December. For the first days of 2019, these reservations would be "down 6.8% for the next three months, but if the protests stopped, we could quickly find growth", told reporters Christian Mantei, general manager of Atout France.
"The situation is very nuanced depending on the country, we feel especially the concern of Asians, customers who need to be reassured.But the signals are positive on the side of European customers, who form the bulk of the battalions" of tourists who go to France, said Secretary of State Jean-Baptiste Lemoyne. In France, "the strongest impact was on the month of December.On January and February, this decline slows down, and in March we start again on a growth of international arrivals.We must maintain this spiral of recovery", summed up Mr. Lemoyne. He said he received, during the week, several players in the French tourism sector, including officials Galeries Lafayette and the Eiffel Tower.
In addition to the repercussions on tourism and trade, the confidence of foreign investors in the government's ability to carry out its reform agenda could weaken as The gallery recently Natixis economist Véronique Janod. Indeed, the executive has already postponed or postponed some key projects such as unemployment insurance or pensions.
A possible rebound
Despite a difficult end of the year for the tricolor economy, domestic demand could return to color in the first half. Indeed, the measures announced by Emmanuel Macron last December 10 could still boost the purchasing power of the French. The widening and acceleration of the revaluation of the activity premium, the exemption from overtime, the cancellation of the increase in the CSG for a large part of pensioners would have significant effects on the wallet of the French . In their work, INSEE economists believe that the global impact "would be 0.5 point of gross disposable income (, RDB, that is the income available to households after redistribution operations) during the first quarter of 2019." Moreover, the fall in oil prices and inflation already play in favor of the wallet of the French.