The latest output and external trade data indicated a relatively flat growth profile in the last months. Notwithstanding a sizeable fiscal stimulus, growth has not accelerated owing to several shocks (German stagnation, car sector problems, strikes…) that weighed down on demand. And despite some industrial output cuts already implemented, inventories are still significant and further output curbs are now needed, in particular in the car, metals, plastics/rubber, agrifood and textile sectors. Moreover, export gains are now plateauing after being the main growth driver in H1. At the same time, growth is still vibrant in key French strongholds such as pharmaceuticals and aeronautics where both industrial output and exports continue to surprise on the upside. Against this background, wage growth is at the same time a positive factor since it fuels purchasing power gains for households, and a threatening one since corporates now see their margins constrained by real wage increases. All in all, economic growth should remain quite resilient in 2020 compared to 2019 (+1.2%).
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Authors
Stéphane Colliac
