French central bank trims 2018 growth forecast

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The French economy is expected to expand by 1.6 percent this year, the country's central bank said Friday, well short of the 2 percent goal originally set by the government for this year.

The slower growth is likely to compound the challenges facing President Emmanuel Macron, who campaigned on a pledge to dynamise the economy with reforms that would make it easier to do business in the country.

Finance Minister Bruno Le Maire had already acknowledged this week that growth was unlikely to reach that target, forecasting a 1.7 percent rise in GDP.

"After an exceptional year in 2017 as France benefited from strong global demand, exports will continue to have a positive impact on growth in 2018 but will have a neutral impact going forward," Bank of France governor Francois Villeroy de Galhau told Europe 1 radio.

As recently as July the central bank had been forecasting growth of 1.8 percent, anticipating an uptick in the later part of this year.

It also expects inflation to reach 2.1 percent for the full year, a trend which could alarm consumers already worried about eroded spending power.

Looking forward, however, the central bank expects unemployment to decline steadily to around 8.5 percent in 2020 from the 9.4 percent recorded last year.

Poll ratings for Macron, a former investment banker, have slumped to their lowest levels since his election in May 2017, as tax cuts intended to spur spending have yet to bear much fruit.

He has also struggled to shake off perceptions that he is the "president of the rich," despite pledging Thursday to tackle poverty with a four-year plan worth eight billion euros ($9.3 billion).

An Odoxa survey published Tuesday showed that just 29 percent of respondents considered the 40-year-old centrist leader a "good president", down 12 points from a similar poll in the summer.


© 2018 AFP

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