(Bloomberg) --
The French economy will succumb to the headwinds of weak global trade next year after strong domestic demand helped it resist the euro-area slowdown in 2019, according to the Bank of France.
The central bank cut its 2020 GDP forecast to 1.1% from 1.3% in September, when it had expected stronger exports. Consumer spending growth will accelerate, although at a slightly slower pace than previously expected.
“The sharp deterioration of the international environment will translate into a marked slowdown in exports,” the Bank of France said. “French growth will wane in 2020.”
Growth will pick up slightly in 2021, to 1.3%, according to the central bank. Even in 2020, households will continue to benefit from the tax cuts Emmanuel Macron brought in after the Yellow Vest protests, it said.
It also expects that the ongoing strikes in France will have a limited impact on growth. Briefing journalists in Paris, Chief Economist Olivier Garnier said consumer confidence remains high and even the more prolonged strikes in 1995 took only 0.2 percentage points off one quarter of growth.
“There can be an impact depending on how long it goes on,” Garnier said. “But even if there are significant effects in some sectors, it doesn't call into question the economic scenario.”
To contact the reporter on this story: William Horobin in Paris at whorobin@bloomberg.net
To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net
©2019 Bloomberg L.P.
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