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Can New Leadership Speed Up France’s GDP Growth?

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France’s GDP growth

All the member countries of the Eurozone (VGK) (EZU) (IEV) have faced challenges in the past years. Low economic growth, lower consumer spending, and deflation have been major concerns for constituent economies.

However, the situation has been changing gradually. Specifically, we’ve seen France’s (EWQ) manufacturing PMI (purchasing managers’ index) and service PMI.

In the past two quarters, we’ve seen that France’s GDP growth has been improving gradually. In the fourth quarter of 2016, its annualized GDP growth was at 0.4%, as compared to 0.2% growth in the third quarter of 2016. Growth in the fourth quarter was mainly driven by household consumption and investments.

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GDP composition

According to CIA (US Central Intelligence Agency) report, if we analyze the 2016 estimated GDP composition of France, we can see that among the various sectors, the agriculture sector contributed 1.7%, while industry contributed 19.4%, and service contributed 78.8% to overall GDP.

After the announcement of the first round of its Presidential election exit polls, investor sentiment toward the French economy has improved. If Emmanuel Macron wins the second and final round of the election on May 7, 2017, we could expect a business-friendly environment, which could bring more investment opportunities in France.

Tax exemption for local housing would be another great advantage for French citizens. As the service sector contributes the most to overall GDP, we may see some investments in this sector during the presidential campaign season, which could further drive economic growth.

In the next and final part of this series, we’ll analyze the advantages of remaining in the EU today.

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