Chart of the Week : France’s Bank Loan Growth
Head of Macroeconomic Research
Summary: Discover the secret ingredient behind France's strong economic momentum.
In today’s edition, we focus on the French economy. Despite the Yellow Vest Movement in 2018 and the longest transport strike in 50 years in 2019/early 2020, France is among the best performing economies in the Eurozone. In 2019, GDP growth is expected to reach 1.3%, which is twice more than Germany’s GDP, and 1.2% in 2020. The country is finally following a positive trend. Unemployment is receding at a 10-year low and more than 500k jobs have been added to the economy since 2017, including 260k past year. Since two years, France has also experienced an industrial renewal, which was basically impossible to imagine a few years ago, with the creation of 24k jobs since 2018. Macron’s policies to cut tax on companies and investors and made hiring and firing easier via changes to labor laws have undoubtedly restored investors’ confidence and helped boosting growth but, in our view, the main explanation behind France’s positive performance is to find somewhere else. In the chart below, you have the evolution of bank loan growth to the private sector since 2014. It has continuously increased over the years and it has evolved without any interruption above the stunning level of 5% YoY since July 2018. Credit – in other words debt – has been fueling the economy at a rapid path under Macron’s presidency and it is clearly a better explanation for the good performance of the French economy in 2019 than solely the impact of the structural reforms and/or the demand-oriented package decided to appease social unrest. France’s secret ingredient behind strong economic momentum is basically more debt.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.