World in turnmoil, growth losing steam Economic Outlook - march 2025

 

Conjoncture in France
Paru le :Paru le21/03/2025
Conjoncture in France- March 2025
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Focus – Why has industrial production held up in France and Spain for the past two years, while declining in Italy and Germany?

Since the beginning of 2023, the manufacturing industry production index has declined sharply in Germany and Italy, with its average in 2024 standing at 5.4 and 4.7 points respectively below its 2021 average. Conversely, production increased by 2.4% in France and 1.8% in Spain over the same period. There are several factors to account for this sharp divergence. First, longer-term dynamics show that the decline in German industry began before the health crisis and appears to be more structural than in Italy. Over the recent period, however, the sectoral composition of French and Spanish production has differed significantly from that of Germany and Italy, which are heavily positioned in products linked to the investment cycle, especially the manufacture of machinery and equipment. Finally, within certain sectors (pharmaceuticals, textiles, etc.), France and Spain have outperformed their neighbours, Spain more often than France.

Germany and Italy have been penalised both by weaker performances in their respective sectors, but also by the sectoral composition of their industries. In addition to the cyclical effects linked to rising energy prices, the German economy is suffering from weak demand for its goods, particularly in the automotive industry, due to growing competition from Chinese industry. The pessimism shown in the business survey results suggests that this decline could continue in the coming quarters. Thus the deindustrialisation process affecting Germany twenty years behind its neighbours is expected to continue in the short term: industrialists here remain much more pessimistic than in other European countries...

Conjoncture in France

Paru le :21/03/2025