Lhe economic situation in France is worrying, with the sharp rise in energy prices. But after a closer examination, the French economy reveals worrying weaknesses, which demonstrate the extent of the ongoing structural deterioration.
A superficial analysis could lead to an optimistic vision and make believe in the solidity of our economy. The main macroeconomic indicators do not reveal any major weakness. Gross domestic product (GDP) grew by 25% at the start of 2022 in France, exactly as in Germany. The unemployment rate is today at its lowest level for twenty years (7.2%), with the exception of the very beginning of 2008 (7.1%), when it was still 10.5 % in 2016.
Despite the succession of crises, employment has progressed in the recent period: it is, at the 1er quarter of 2022, 2.9% above its level at the start of 2019, and the labor force is 1.3% above its level at the start of 2019, with therefore strong growth in employment and participation (proportion of the working-age population entering the labor market) since the end of the Covid-19 crisis.
The current account (the balance of trade in goods, services and income with the rest of the world) has been balanced on average since the second half of 2020, after being in deficit from 2005 to 2020. The interest rate differential with Germany, even if it has increased since the spring elections, remains low, around 60 basis points. Finally, the number of business bankruptcies is very low, around 32,000 on an annual basis in the spring of 2022, compared to 45,000 to 65,000 over the period 2002-2019, despite the strong growth in credit (loans guaranteed by the ) during the crisis resulting from Covid-19.
If we stopped there, we would conclude that France has no growth deficit, has created a lot of jobs, has rebalanced its foreign trade, has no problem with its public debt and has very solid companies. . But, unfortunately, this is not the case, because the French economy suffers from four serious weaknesses.
Declining job quality
The first is that of industry. The recent period has highlighted its inability to meet demand. Twenty years ago, France's trade balance for industrial products had a surplus of 25 billion euros per year; before the Covid crisis, it was in deficit of 35 billion euros per year; at the beginning of 2022, the annualized trade deficit for industrial products exceeds 100 billion euros. The surge in demand (computing, household equipment, etc.) that occurs after the Covid crisis is more than 60% satisfied by imports. Industrial production falls with each crisis: it is now 10% lower than in 2002. The fact that the overall current account is balanced results from the trade surplus in services, in particular tourism, and the repatriation profits of French multinationals.
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