Despite being the fourth most populated country and having the second largest economy in Europe, like many other surrounding nations, France is still recovering from the effects of 2008 economic crisis.
The recent yellow vest protests revealed there is a large amount of displeasure with Emmanuel Macron’s government, with rising unemployment rates and a slowly expanding economy underpinning much of the growing unrest.
Due to the ongoing economic slowdown in China there are uncertainties related to trade tensions and an overall weaker global demand. And because of the anti-pollution standards put in place last September, there has also been a slowdown in sales in the automotive sector.
Growth across the Eurozone has been slow paced and ongoing uncertainties surrounding Brexit continue to be a hindrance. Currently, experts predict growth in the French economy will peak at 1.2% for 2019, with 2020 set to rise slightly to 1.4%.
The economy expanded by 0.3% in the first quarter of 2019, a rise which many believe to be a result of the fiscal measures implemented to appease the yellow vest protests. From 1949 until 2019, the GDP growth rate in the country was an average of 0.78%.
The introduction of a 10 billion-euro package by the government last December is seen as one of the key factors in this small rise. It has been designed to boost the incomes of the lowest paid workers and pensioners.
In April, an additional pledge was made to reduce income tax by 5 billion euros, as a further response to the yellow vest protests.
When compared to year-on-year figures, the French economy grew 1.2% in the first three months of this year. This maintained the expansion rate experience in the final two quarters of 2018.
The Bank of France predicted in May of this year that Q2 growth would remain at a steady 0.3% in light of the protests and other mitigating effects.
Signs of improvement within the economy
An attractiveness survey conducted by the leading accounting firm, Ernst & Young, has shown that France is leading the way when it comes to new investment. Behind the UK it boasted the second highest amount of new manufacturing research and development projects in 2018. This has seen the country overtake Germany for the very first time.
The service sector remains the largest employer in the country, accounting for up to 70% of the working population. It’s an area that continues to grow, delivering almost 80% of the national GDP. A large portion of this comes from the tourist trade, with around 90 million people visiting the country each year and contributing anywhere between 7-10% of France’s GDP. As a result, France remains the most visited country in the world.
Overall it is a mixed report for the economy, with some areas of concern given the unstable nature of the global markets. The growth experienced in the first quarter of the year shows signs that the French economy may be recovering, even though it has yet to the return to pre-crisis levels.