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France Business Forecast Report Q2 2014 - New Study Released

New Country Reports market report from Business Monitor International: "France Business Forecast Report Q2 2014"

 
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Boston, MA -- (SBWIRE) -- 02/17/2014 -- While the rest of the eurozone is showing early signs of recovery, the French economy continues to stagnate. 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, President Francois 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 limited by divisions within his own party and core support base, and resistance from the proliferation of special interest groups that will make unilateral reform a troublesome and compromised process.

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We expect pressure 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 revised up our 2013 real GDP growth estimate for France to 0.2%, from a previous forecast of 0.0%, on the back of strongerthan- expected household consumption.

Key Risks To Outlook

Downside Risks To Fiscal Forecast: The possibility of a further intensification of the eurozone sovereign debt crisis and the potential need for state-led capital injections in the domestic banking sector keeps the risks to our fiscal deficits over the medium term firmly to the downside.

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