PARIS--French economic growth will pick up slightly in the first
half of 2015, as collapsing oil prices and a weaker euro amplify
the impact of President François Hollande's tax cuts, national
statistics agency Insee said Thursday.
In its first forecasts for the first six months of next year,
the statistics agency said gross domestic product growth will rise
to 0.3% quarter-on-quarter in the first two quarters of 2015, from
0.1% in the final three months of 2014.
"The pace of growth will be a little higher, compared with what
we have seen since the spring of 2011," said Vladimir Passeron, an
economist at Insee.
The more positive outlook for the French economy comes after a
long period of near economic stagnation that has driven
unemployment higher and derailed Mr. Hollande's plans to repair the
country's finances.
Until now, even the French government has been cautious about
the strength of the economic recovery next year, forecasting only a
1% expansion for the whole year. But based on Insee's forecasts for
the first half of 2015, the economy would meet the government's
target for the year, even if there were no further acceleration of
growth in the second half.
That outlook will give Mr. Hollande cause for optimism half way
through his five-year term in office. So far, poor economic results
have made the Socialist leader the least popular president on
record, according to opinion polls, and contributed to stinging
defeats for his party in local and European elections.
The recent tumble in the oil price is already raising consumer
spending power and improving the finances of companies, Insee said
in its December economic outlook, entitled "the breaks are easing
off a little." The weakening of the euro against the dollar since
the summer is also a key reason for a brighter outlook, as it will
help exporters sell their products on global markets, Insee
said.
In its assessment of the impact on the French economy, Insee
said the euro fell to $1.23 in early December from $1.37 on average
in the second quarter, and oil fell to $78.4 a barrel in November
from an average of $109.8 in the second quarter. Together the
declines add 0.1 percentage point to quarter-on-quarter growth, and
the economy could expand even faster if oil remains below $70 a
barrel, or the euro falls further below $1.23, Insee said.
The boost to competitiveness and company finances from a lower
euro and a lower oil price will coincide with an increase in tax
cuts for employers. That will improve corporate margins and
encourage investment and recruitment, the statistics agency
said.
Still, despite the improvement in economic growth, Mr. Hollande
will still miss his key target: bringing down unemployment. As the
active population rises faster than jobs are created, unemployment
will reach 10.6% in the second quarter of 2015, the highest level
since 1997, Insee said.
There is also significant uncertainty around the forecasts.
Business leaders could further delay investment and the volatility
of oil prices is hard to predict, Insee said.
"We must be prudent because the oil price could rise as quickly
as it fell," Mr. Palleron said.
Write to William Horobin at William.Horobin@wsj.com
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