OECD lowers growth forecast for France
The global economy could plunge into recession if the Eurozone leaves the road, the crisis, despite the progress, remains the “main threat”, but also if the United States had to go into their “budget wall”, warns the OECD Tuesday.
The Organization for Economic Co-operation and Development (OECD) also reports a new bout of weakness in its half-yearly report on the “Global Economic Outlook” that leads it to downgrade growth forecasts for most major powers.
US growth would be 2.2% this year (2.4% expected in May) and 2% in 2013 (instead of 2.6%). It will then rebound to 2.8% in 2014, according to a first forecast.
In the eurozone, the recession is expected to be stronger this year than previously expected, with the gross domestic product (GDP) down 0.4% instead of 0.1%. The recession would continue next year (-0.1%), while the OECD forecast in May growth of 0.9%. The recovery would be postponed to 2014 (+ 1.3%).
No new measures of rigor in France
For France, the OECD forecasts weaker than expected growth, which will prevent it from being in the budget nails in 2013, but the government must not take new measures of rigor. According to new forecasts from the Organization for Economic Co-operation and Development, growth should be only 0.2% this year and 0.3% in 2013 in France. This is less than expected in its previous forecasts released in May (0.6% and 1.2%).
Above all, it is less than the growth of 0.3% in 2012 and 0.8% next year expected by the government to meet its budget commitments.
As a result, if the public deficit of France should, as promised, be set at 4.5% of GDP this year, it would not be in the European nails in 2013. The OECD plans a deficit of 3.4% next year, while the government has committed to reducing it to 3%.
It would go back to the ceiling allowed by the EU treaties in 2014, at 2.9% of GDP. At the same time, the public debt would continue to swell, reaching a record level of 95.8% of GDP in 2014, while France hopes to push it back as of that year.
The situation is also serious on the social front: while President François Hollande has pledged to reverse the unemployment curve by the end of 2013, he could actually continue to climb, up to 10.9% of the active population in 2014 in metropolitan France (11.3% including the Overseas).
However, the OECD believes that the “credibility” of the government in budgetary matters is “strengthened ” by its ” determination to correct the deficits” and the very recent creation of a High Council of Public Finance backed by the Court of Auditors.
It also suggests, thinly veiled, that the official budgetary commitments for next year are too “ambitious” and therefore considers that “automatic stabilizers should be allowed to playfully if growth was to be less than expected in the budget”.
In concrete terms, this means that, even if growth is not achieved and the deficit may not return to 3% in 2013, the government must refrain from taking further measures of rigor to achieve this goal. at all costs. For the moment, Paris assures to reach 3% at all costs.
The rich countries’ club calls on France to “seize the opportunity of this beginning of the government’s mandate to launch a comprehensive medium-term strategy of debt consolidation, spending cuts and structural reforms to boost confidence and improve competitiveness and growth”.
“The recently announced competitiveness pact is an important first step in this direction and will support job creation, investment and exports as of 2014,” its experts say.
Growth would rebind that year to 1.3%, according to a first forecast of the OECD. Here too, it’s less than the 2% expected by the government.
To do better, the organization asks France to cut spending and sees “considerable” savings margins in social security and local communities. In the same way, it recommends a thorough reform of the educational system and the markets for goods and labor.