France

In 2011, the growth rate of GDP in France was the same as in 2010 (1.7%), being supported mainly by higher investment spending in order to rebuild stocks. The slower growth in industrial production in 2011 (2% compared to 4.8% in 2010) led to the initiation of strong measures to support industrial entrepreneurs. The trade deficit reached a new negative record in 2011 - 69.6 billion euros. In the fourth quarter, the tensions in euro area were reflected in deteriorating the economic growth, forcing central banks to inject massive liquidity into the banking system. The surprising victory of the socialist Francois Hollande in the presidential election has changed the political landscape in France. The new president advocated the need to apply not only austerity measures, but also measures to boost growth. The economic prospects for 2012 are less favorable and GDP growth is forecast by the European Commission and the OECD at just 0.5%. Private consumption began to lose its traditional role as engine of growth being affected by increasingly low income of the population. The rising euro area tensions, which have spread from Greece to Portugal, Spain and Italy, have adversely affected the economy of France, imposing a maximum prudence in public spending.