Le temps des conséquences

According to the latest release of quarterly national accounts French GDP decreased by 1.1% in the last quarter of 2008. We expect GDP growth to decrease by 2.3% in 2009 and 0.2% in 2010. The unemployment rate will keep on rising, reaching 9.8% at the end of 2009 and 10.7 at the end of 2010. Government borrowing will amount to 6.1% of GDP in 2009 and 7.2% of GDP in 2010. Households' consumption will remain somehow resilient in the first quarter of 2009 because of the financial incentive to buy new cars, the deceleration of inflation under lower energy and food prices. In 2009, the financial and housing crises will dampen economic growth and lead to a sharp deterioration of the labour market. People without a job will see their purchasing power fall while the rest of households will increase their savings rates. Households' consumption growth will be very moderate. The external outlook is unlikely to improve significantly in the short term. French exports' growth will be weak, while domestic households and companies will keep on reducing their indebtedness levels, under tight credit access. Companies will postpone their investment plans and will continue to reduce their stock levels. Output will start to grow again from 2010 albeit as a very slow pace, insufficient to be qualified as a recovery.