Contenu du sommaire : Perspectives économiques 2019-2021

Brakes on growth
Since the Great Recession of 2009, the global economy first went through a rebound phase – in 2010 and 2011 – and then grew at an average annual rate of 3.3% between 2012 and 2017. The acceleration observed in 2017, when global GDP grew by 3.5% due in particular to the late recovery in the euro zone, gave rise to hopes for a more long-term growth rate that would make it possible to absorb the imbalances inherited from the crisis, such as unemployment and the public debt. The slowdown in activity seen in the first half of 2018, with a further deceleration towards year end, heralds a less favourable scenario. Trade tensions, the difficult Brexit negotiations, the slowdown in Chinese growth and the application of new standards in the automotive sector have put the brakes on the momentum for growth, which fell back to 3.3% in 2018. Many cyclical surveys indicate that this trend will continue in early 2019. Some more alarmist indicators, such as the trend in the US yield curve, suggest an increased likelihood of a recession1. Yet, beyond the obvious climate of uncertainty, many factors are still boosting activity and preventing the outbreak of a recessionary spiral. Despite the lack of international coordination, many countries will benefit from expansionary monetary policy and / or fiscal policy. Thus, the European Central Bank and the Bank of England are delaying the normalization of their monetary policy. In the United States, the Federal Reserve's support for GDP will be reduced, but monetary policy should not become restrictive. On the fiscal policy side, many governments – in the euro zone, the United States and also among the emerging countries – will adopt measures to boost the economy at least for 2019.JEL classification: F01.

France: growth spared
With growth subdued at 1.6%, the year 2018 showed the fragility of the French economic recovery, whether this was due to the rapid deterioration of the external environment or to internal dynamics, including a tax calendar that penalized purchasing power at the beginning of the year and the "yellow vests" crisis, which held down consumption at year end. In 2019, growth was boosted by a strong increase in purchasing power (+2.5%), due to socio-fiscal measures (nearly €12 billion**) and the significant hike in real wages with the exceptional bonus and the slowdown in inflation. Consumption, though dynamic (+1.6%), was mired in a context marked by numerous uncertainties related to both the social crisis and the outcome of Macron's Great Debate; the savings rate should rise to 15.1% in 2019, 0.9 percentage points higher than the 2013-2018 average. With high profitability, favourable financing conditions, a high capacity utilisation rate and an expected rebound in consumption, business investment should benefit from fair winds in 2019 (+3%). The case is otherwise for household investment, which should fall slightly (-0.2%). Marked by the slowdown in world demand (which will be amplified in case of a “hard Brexit” or intensified trade tensions), the growth of French exports should decelerate in 2019. The fiscal stimulus targeted at the middle classes should boost the consumption of both domestic output and imports. Fiscal policy alone should give growth a 0.5 GDP point lift, of which 0.3 percentage points is attributable to the Economic and Social Emergency Measures Act. In the end, driven by accelerating domestic demand while also factoring in a negative contribution from foreign trade, GDP should rise by 1.5% in 2019. With GDP growth of 1.4% in 2020, the year should witness the country's return to its potential growth rate. While rising household consumption (+1.6% in 2020) should benefit from lagging purchasing power, external demand is likely to remain sluggish. In 2021, with a restrictive fiscal policy and an expected rise in the euro, growth should be in line with potential growth, at 1.2%. This scenario is dependent on future adjustments, such as the complete overhaul of France's housing tax and any changes arising from the Great Debate. With slower growth, fewer jobs will be created than in 2017-2018. The labour market will be marked by the conversion of the CICE tax credit into lower social contributions and tax exemptions on overtime. The unemployment rate should fall from 8.8% currently to 8.7% by end 2019, 8.5% at end 2020 and 8.4% at end 2021. With the transformation of the CICE, the deficit will rebound to 3.1% of GDP, then 2% in 2020 and 1.5% in 2021. The budget trajectory will also depend on the decisions taken at the end of the Great Debate.JEL classification: F01.

Is the inversion of the yield curve always followed by an economic slowdown?
Various studies conducted on US data suggest that a reversal of the yield curve is followed by a recession on average 12 months later. The flattening of the rate slope observed since the end of 2018 in the United States thus raises fears of a sharp downturn in activity. The purpose of this article is to analyse the information contained in the term structure of interest rates in order not only to verify the relevance of this relationship for the US but also to test its relevance for France and the euro zone. Our estimates confirm the existence of a robust relationship between the slope of the yield curve and US growth. The results show that a reversal of the yield curve increases the probability that the US will experience a recession in the months following the reversal. Nevertheless, with respect to past episodes when the curve was reversed, the current situation suggests that the risk is of a limited recession. Furthermore, the estimates for France and the euro zone indicate that the information contained in the interest rate curve is far too weak to predict recessions or growth.JEL Codes: E32 – E37 – E43 – E44.

Trends and productivity cycles per main market branch in the French economy
We break down work demands by major market branch (industry, construction, market services) in order to measure sector-based productivity trends and the way they are changing. Estimates of labour demand equations indicate a slowdown in trend productivity gains mainly in industry, which is consistent with the existing literature. Coupled with the decline in industry's share of employment, this accounts for 90% of the decline in the growth rate of trend productivity since the 1980s. In recent times, trend productivity has risen at a rate of 0.9% per year (1.9% per year in industry, 0.8% in services and 0.1% in construction).JEL codes: J23, J24, 04.