L'économie française d'ici 1992

[eng] Forecasts for the French Economy at the Dawn of 1992 M. Fouet, A. Fonteneau, E. Bleuze As regards the international environment, the two main hypotheses underlying these forecasts are an increase in the oil price, at an annual rate of 12 %, to reach $31 per barrel by 1992, and a recession in the United States as early as mid-88. Combined with a moderately restrictive monetary policy, US budgetary policy is likely to be insufficient to prevent a downward cyclical movement in domestic demand, despite a positive contribution from foreign trade. Given the world trade context, international competition is predicted to become stronger. Despite an end to dollar devaluation, US products will remain competitive and the Asian exporters will be more attracted by European markets. The evolution of the French economy is likely to be affected importantly by the international environment. But the assumption concerning the split between wages and profits is of great importance too. If the moderation in the growth of wages observed for several years persists, as predicted, during the six forthcoming years, household consumption growth is expected to be weak (1.4 % per year) and profits are likely to be used to reduce debts rather than to increase productive investment. After 1989, a pick-up in the growth of world demand and improving competitiveness due to real wage stagnation could lead to a positive contribution of foreign trade. Due to some gains of market share after several years of losses, the manufactures balance is likely to be in surplus at the beginning of the 90s. The pick-up of investment in industry in 1984-1985 and in the tertiary sector since the end of 1985 is predicted to continue, sustained in the short-term by profits, and then by GDP growth (2.3 % per year from 1989 to 1992). Overall, French economic growth seems likely to be led by exports and investment. Nominal wage rates are likely to increase at an annual rate of 3.8 % over the period 1987-1992, compared with 3.5 % for the consumer price index. Margins should continue to improve, this ending only at the end of the period because of the oil price increase, which will lead to an upturn in inflation. The recent slowdown in productivity growth seems to a large extent to be structural, and could permit some growth of employment (+ 210 000 from 1989 to 1992). Taking into account the growth of the active population (+ 180 000 persons per year) and the effects of employment policies, the number of unemployed could reach 3.2 million by 1992. These forecasts underline two sources of deficit for the public and social accounts : the weakness of VAT revenues and of social contributions payed on salaries. To achieve its deficit reduction objective, the government should reduce the growth of expenditure, and stop the tax cut programs launched since 1985. To emphasize how susceptible the French economy is to international development, a more favourable hypothesis is studied at the end of this article.