France: Can foreign trade be a growth engine?

- "During the last cycle, French growth was mainly - not to say exclusively - based on domestic demand, especially household consumption. While it has markedly - and permanently - weakened, it would seem that foreign trade has now taken over the role of driving force of activity. That is in any case what the latest national account figures suggest, excluding effects of changes in inventories, since France pulled out of recession in the spring of 2009."
- "For our part, we believe that French foreign trade has primarily benefited from a series of favourable and temporary factors, against the backdrop of a sharp pick-up in trade after the post-Lehman collapse in global trade. Insofar as structural problems persist, we remain relatively sceptical about the probability of a rebalancing of French growth to the benefit of the export sector. The weaker domestic demand will only just generate a smaller negative contribution of foreign trade over the next two years."
- "We therefore remain relatively pessimistic about French growth prospects for 2012."

Natixis Flash Economics 432 20100901

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