French Central Bank Upgrade Forecasts for Growth and Inflation

On Thursday, the Bank of France had an upward revision of its forecasts for growth and inflation, as the central bank expects for a strong reversal in French exports for this year along with the increase in consumer expenditure and firm investment. While forecast for this month further shows an expansion on  2018 economic growth from 1.7 percent to 1.9 percent in December. Inflation was lifted by prices of energy and tobacco and was able to attain 1.6 percent this year compared with the December forecast of 1.4 percent.

The bank’s bullish economic outlook highlighted the strengthening French economy that surprised many economists. The robust business investment in December supported the economic growth for last year, as it reached 2 percent, while business polls earlier this year showed that activity came in stronger than the anticipated results.

Moreover, the central bank reduced its unemployment views from 9.6 percent to 8.9 percent in December followed by a steep decline in the rate at the end of 2017. However, the bank appears to be leery in the longer term, slashing its growth projection from 1.8 percent to 1.7 percent. Also, the central bank predicted that the euro will gain strength to soften the export demand. Likewise, the bank believes that the growth forecast would improve even after this year but it depends on the effect of the economic overhaul. While President Emmanuel Macron imposed revisions to labor laws and corporate tax reductions.