France’s Economic Growth Sharp Decline in 2018

The economy of France dropped from 2.3 percent to 1.7 percent this year, according to the forecast of National statistics, which is another financial problem of President Emmanuel Macron in reducing costs of the government.

Macron’s administration aims to reduce spending and maintain the deficit targets of the European Union with 2.0 percent target growth for 2018.

Growth has been steady and there are no particular concerns, remarked by Finance Minister Bruno Le Maire on Monday.

However, statistics agency through that the government would fail to meet the target as it would be pulled lower by a strong euro and increasing oil prices as some of the influential factors.

Gross Domestic Product increased by 0.3 percent in the second quarter, higher than the previous quarter’s rate of 0.2 percent. Further increased by 0.4 percent in both the remaining two factors in twelve months with  1.7 percent.

The Central bank of France revised lower their target growth of 1.8 percent in a year, following a bright year in 2017. It has changed as if covered by clouds in France and the eurozone as described by the head of Insee's economic outlook division Frederic Tallet.

This includes external factors over which the nation has less control such as global trade war, higher costs of oil prices, a strong euro, as well as, political uncertainties in Europe, notwithstanding the new far right-eurosceptic coalition in power in Italy.

Moreover, domestic concerns including sluggish household consumption and nearly three months of unabating train strikes that will likely bring down the second-quarter growth by 0.1 percentage points.

The forecast says that the corporate investment will slow down from 4.4 percent to 3.1 percent over the year, while household investment would decline from 5.6 percent in 2017 to 1.6 percent.

On a brighter side, good progress was seen on the trade and unemployment concerns. Unemployment will only decline slightly which is currently twice the value of Germany or Britain. The forecast rate is 8.8 percent at the end of the year from 9.0 9.0 percent at the end of last year.

A slow start of exports in 2018 is expected to change in the second quarter with the help of large demand in the aviation and shipbuilding sectors, according to the agency. On the other hand, households will gain from the reduction in both of the residency and payroll taxes.