France: I will survive

5 min
Stephane Colliac
Stephane Colliac Senior Economist for France and Africa

“First, I was afraid, I was petrified” was certainly what could have been said after the worrisome evolu¬tion of household purchasing power in Q1 (-0.6% q/q). We have estimated that private consumption grew by a cumulated mere +0.5% from Q3 2017 to Q2 2018. This triggered downward revisions of 2018 growth forecasts by (almost) everyone to +1.8% (after +2.3% in 2017). And? The two main French carmakers published record sales figures for H1 (about +10% each). And? The French soccer team won the World Cup. We calculated that such an event will improve consumer sentiment and nurture consumption growth, revising it from +1.1% to +1.3%. Such an increase will make +EUR2.7bn of additional opportunities (from new TVs, drinks during the competition to new skirts with two stars and an increasing willingness to make holiday trips). Among that, +EUR0.7bn will be imported and +EUR2bn will benefit directly GDP growth, triggering a revision of our forecast by +0.1pp to +1.9%.