(Bloomberg) --
France's economy is having a weaker first half of the year than anticipated amid trade headwinds and the broadening slowdown in the euro area, according statistics agency Insee.
In its latest forecasts, it said President Emmanuel Macron's efforts to boost consumer spending had a smaller effect than anticipated, and growth has fallen short. It provided a first forecast for 2019, predicting 1.3% expansion.
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| GDP | 2.4% | 1.7% | 1.3% |
| Consumer spending | 1.6% | 0.9% | 1.3% |
| Exports | 4% | 3.5% | 2.5% |
The outlook echoes growing pessimism about the euro-area economy amid a prolonged slump in manufacturing and concerns that trade shocks could further exacerbate the situation. In Italy, the statistics office sees a chance of a contraction this quarter and predicts full-year growth of just 0.3%.
Insee previously forecast a bigger impact from Macron's tax cuts in response to the Yellow Vest protests. But consumers have been more cautious, choosing to increase savings rather than spend the gains. On a brighter note, the statistics agency said growth will be strong enough to keep unemployment falling, and it sees the jobless rate at 8.3% in 2019, down from 8.8%.
“The acceleration in household consumption has not been as pronounced, however, perhaps reflecting a climate tinged by a wait-and-see attitude in the shadow cast by the yellow vests crisis,'' Insee said.
To contact the reporter on this story: William Horobin in Paris at whorobin@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Chad Thomas
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