France revises down growth forecast for 2016

Posted on November 18, 2016

The French government has revised down its growth target for this year to 1.4 per cent from 1.5 per cent previously as the eurozone’s second largest economy is hampered by terrorism and strikes.

The decision comes after France ground to a halt in the second quarter and grew by a 0.2 per cent in the third quarter, less than expected, writes Anne-Sylvaine Chassany.

“What matters is, does it have any consequences on unemployment? No. We haven’t created so many jobs on a net basis since the (financial) crisis,” Michel Sapin, finance minister and a Hollande loyalist, told Europe 1 radio station.

Mr Sapin said the slowdown would not affect the government’s target to narrow its deficit to 3.3 per cent of gross domestic product. The French government has kept its forecast of 1.5 per cent GDP growth for next year, when France is choosing a new president.

The revision is another blow to the deeply unpopular French socialist president François Hollande, who has hinged his decision to seek reelection on his capacity to reduce unemployment. While the French economy has started to create jobs on a net basis, it has not been enough to compensate for the cohorts of youngsters who enter the job market every year.

Joblessness rose by 0.1 per cent to 10 per cent of the workforce in the third quarter, according to Insee, the national statistics institute.

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