Zero inflation, dynamic purchasing powerConjoncture in France - March 2016

Vladimir Passeron - Dorian Roucher - Jean-Cyprien Héam - Camille Sutter

General outlook : Zero inflation, dynamic purchasing power

At the end of 2015, the outlook remained gloomy in the emerging countries. Activity also slowed in the advanced economies. At the beginning of 2016, world trade growth is likely to remain weak. As oil prices fell one again, however, inflation remained very low and household purchasing power improved in the advanced countries. In the Eurozone, activity is likely to perk up as consumption accelerates and investment shows an upturn, but foreign trade is likely to hold growth back. In France, household consumption should show a marked rebound, after a downturn in Q4 2015 as a result of the terrorist attacks of 13 November 2015 in Paris and the mild autumn temperatures. It should be driven by purchasing power, dynamic again with income remaining robust while inflation is close to zero on account of its energy component. In addition to this, after declining sharply for over two years, the fall in investment expenditure on housing should ease. There are also a large number of factors encouraging companies to invest more: their margin rate took a sharp turn for the better in 2015 and should come even closer to its pre-crisis average in early 2016, thereby boosting businesses' capacity to finance their projects on their own funds. All in all, as the business climate returns to its long-term average, French growth is likely to be a little more buoyant in H1 2016 (+0.4% per quarter). After a year of moderate recovery in 2015 (+1.1%), the growth overhang for 2016 should already be at a similar level by the middle of the year. With this slight acceleration in activity and the development of schemes aimed at making growth create more jobs, market-sector employment is likely to progress at close to the same pace as at the end of 2015. Total employment is set to increase more quickly than the labour force and the unemployment rate should fall again moderately, to 10.2% in mid-2016 for France as a whole.

Conjoncture in France
Paru le : 17/03/2016