France Business Forecast Report Q4 2014

Date: July 21, 2014
Pages: 42
Price:
US$ 1,195.00
Publisher: Business Monitor International
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: F1E16A743EFEN
Leaflet:

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France Business Forecast Report Q4 2014
Includes 3 FREE quarterly updates

Core Views

While the rest of the eurozone is showing early signs of recovery, the French economy continues to lag behind the region. While the improving regional economic outlook may provide some limited upside potential, this might not be sufficient to drive a recovery in French manufacturing unless the country first addresses its outstanding competitiveness issues.

While we are likely to see a gradual increase in positive rhetoric towards structural reforms, Hollande is unlikely to become an ambitious reformer of the French model. While we expect some reformers will take baby steps in the right direction, the ability of Hollande to implement sweeping reforms will be restrained by divisions within his own party and core support base, and resistance from the proliferation of special interest groups which will make unilateral reform a troublesome and compromised process.

We expect pressures on the government to engage in more concerted fiscal consolidation to mount over the coming quarters, particularly as lower growth begins to translate into lower government revenues. While France has thus far not fallen prey to the bond vigilantes like the peripheral countries of the eurozone, the country nonetheless has one of the largest public sector debt piles in Europe and remains susceptible to contagion effects.

Major Forecast Changes

We have downgraded our government budget forecasts for France and now expect the fiscal deficit to arrive at 4.0% of GDP in 2014 and 3.7% in 2015, from 3.4% and 3.1% previously.
Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook

CHAPTER 1: POLITICAL OUTLOOK

SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Le Pen Likely To Reach Presidential Runoff In 2017
High unemployment, low growth and a fractured political centre ground are increasing the probability that far-right Front National leader
Marine Le Pen will make it through to the second round of the presidential election in 2017.
  Table: Political Overview
Long-Term Political Outlook
A Tumultuous Decade Could Lie Ahead
We expect several dynamics to come to the forefront of France's political scene in the coming decade. These include France's role in
the world, economic reforms, the challenge of demographics and the potential resurgence of left-wing parties after years in the political
wilderness.

CHAPTER 2: ECONOMIC OUTLOOK

SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Consumers No Longer Offsetting Weak Corporate Activity
There is a growing risk that France's economic recovery will fail to materialise, as rising unemployment and declining consumer
confidence begin to weaken household consumption, which has historically been the dominant engine of growth. Fixed investment is
being constrained by weak business confidence, arising from mixed signals from the government, while the government is coming under
growing pressure from the EU Commission to step up austerity measures ahead of the 2015 deadline.
  Table: GDP By Expenditure
Balance Of Payments
Lack Of Reform Reinforcing Current Account Deficit
The failure of President Francois Hollande to undertake meaningful reform of the French economy will ensure that the country continues
to run a steady current account deficit for the foreseeable future.
  Table: CURRENT ACCOUNT
Fiscal Policy
On Track For Collision With Germany
We have downgraded our government budget forecasts for France and now expect the fiscal deficit to arrive at 4.0% of GDP in 2014
and 3.7% in 2015, from 3.4% and 3.1% previously. While low inflation the ECB's commitment to backstopping sovereigns has kept
borrowing costs down, low growth and deflation remain salient risks for the steadily rising debt load.
  Table: Fiscal Policy
Regional Economic Outlook
Assessing The Aftermath Of ECB Policy Action
The European Central Bank (ECB) has delivered on nearly all of the policy options that we were expecting for the June 5 meeting. This
is a step in the right direction in terms of warding off the risk of deflation and will be positive for European equities and sovereign bonds.
However, we warn - as we have done countless times during previous easing rounds - that the efficacy of ECB policy action will be
limited absent structural reforms in the eurozone at the national and federal level.

CHAPTER 3: 10-YEAR FORECAST

The French Economy To 2023
A Difficult Decade
The French economic model is looking increasingly threatened over the coming decade, with tepid growth, rising debt loads and
persistent unemployment expected to characterise the country's long-term outlook. Despite this somewhat bleak prognosis, we highlight
that we expect France to outperform relative to most of its regional peers.
  Table: Long-Term Macroeconomic Forecasts

CHAPTER 4: BUSINESS ENVIRONMENT

SWOT Analysis
BMI Business Environment Risk Ratings
Business Environment Outlook
Institutions
  Table: BMI BUSINESS AND OPERATION RISK RATINGS
Infrastructure
  Table: BMI Legal Framework Rating
Market Orientation
  Table: Labour Force Quality
  Table: Top Export Destinations
  Table: Trade And Investment Ratings
Operational Risk

CHAPTER 5: KEY SECTORS

Pharmaceuticals & Healthcare
  Table: Pharmaceutical Sales, Historical Data And Forecasts
  Table: Healthcare Expenditure Trends, Historical Data And Forecasts
  Table: Private Healthcare Expenditure Trends, Historical Data And Forecasts
  Table: Government Healthcare Expenditure Trends, Historical Data And Forecasts
Agribusiness
  Table: Milk Production & Consumption
  Table: Cheese Production & Consumption
  Table: Butter Production & Consumption
  Table: Poultry Production & Consumption
  Table: Pork Production & Consumption
  Table: Beef Production & Consumption
Other Key Sectors
  Table: Defence & Security Sector Key Indicators
  Table: Telecoms Sector Key Indicators
  Table: Oil & Gas Sector Key Indicators
  Table: Autos Sector Key Indicators
  Table: Food & Drink Sector Key Indicators
  Table: Infrastructure Sector Key Indicators
  Table: Freight Key Indicators

CHAPTER 6: BMI GLOBAL ASSUMPTIONS

Global Outlook
Global Recovery Still On Track
  Table: Global Assumptions
  Table: Developed States, Real GDP GrowtH, %
  Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
  Table: Emerging Markets, Real GDP Growth, %
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