Hollande clings to signs of growth
La Défense, the largest business district in Europe. Source: Wikimedia
The French economy is set to return to growth this quarter, the central bank declared, as President Francois Hollande aims to consolidate a turnaround ahead of the 2017 general election.
GDP would rise 0.3 per cent by September, said the Bank of France while a Bloomberg survey said an increase of 0.2 per cent was more likely. The eurozone’s second-largest economy stagnated during the second quarter. Sentiment among manufacturing bosses rose to 98 last month, up from 97 in June, the central bank announced. Confidence in the services sector has slipped, construction remained unchanged since June.
It is the first measure of the business mood in France since the Brexit vote of June 23 and the terror attack which killed more than 80 people in Nice on July 14. Retail and services data also rose in July. The tenuous turnaround of the France’s economic fortunes is being given political significance by the troubled Hollande. While he tries to liberalise business and employment laws, the country is still faced with near-record unemployment and a frail recovery that trails that of the eurozone.
The Hollande administration, which predicts growth of 1.5 per cent for the whole of the year, is next month due to present an updated forecast for 2017. French business confidence only crept up from the 18-month low it hit in June, despite the economy grinding to a halt during the second quarter.
The Bank of France business confidence index nudged up to 98 in July, up from 97 in June and slightly above the 97 predicted by economists. Data this year has painted a gloomy picture for the French economy and it stagnated the second quarter, a fall from the 0.7 per cent growth of the first quarter.
Recent purchasing managers’ indices have also indicated tough times with the July manufacturing PMI entrenched in contraction territory.