France – Scenario 2019-2020: Consumption will drive growth

France – Scenario 2019-2020: Consumption will drive growth
  • Overview
  • Focus: purchasing power and consumption in 2019-2020
  • Recent activity trends
  • Our scenario for 2019-2020

In summary

In France, growth is expected to reach 1.4% in 2019, slightly lower than in 2018 (1.7%). On the one hand, the introduction of two series of measures designed to stimulate purchasing power (December 2018 and April 2019) is expected to boost household consumption, even though any significant gains in income are being partly allocated to savings. On the other hand, the slowdown in world growth combined with political, geopolitical and economic uncertainties is having a negative impact on the export business. However, Investment expenditure and job creation remain well oriented.

France – Scenario 2019-2020: Consumption will drive growth

Household consumption is expected to remain fairly robust in 2019 in light of a combination of several positive factors. The tax cuts contained in the 2019 Finance Act, the decline in inflation and the support plan put in place in the aftermath of the Yellow Vests crisis and the Great National Debate have strengthened purchasing power. Purchasing power is expected to show a year-on-year increase of 2.6% in 2019 and 1.7% in 2020. Consumption will increase at a more modest pace in 2019 (1.5%) due to a significant rise in the savings rate driven by the economic sentiment, which, although improving, is lukewarm, and to smoothing by households, which are spending their purchasing power gains only gradually. Cyclical effects are also hurting the consumption of durable goods (especially in the automotive industry). Consumption is expected to increase by 1.5% again in 2020.

Olivier ELUERE, Economist