Euro Challenge 2012
France
An overview of France’s economy
The French economy managed to stave off a more severe recession
than other advanced economies, but the recovery is fragile and the
economy is in need of growth-enhancing and deficit-reducing reforms
France has long supported France’s comparatively lower
European economic integration. reliance on trade, its large social
The country was one of the first safety net, and timely and decisive
six member states to join the government intervention help to
European Economic Community explain why France outperformed
Did you know…? (EEC), one of the predecessors of its peers in 2009, with real GDP
the EU. France was a founding contracting by only 2.5%
History The French
member of the euro area and was compared to a downturn of 4% in
'Declaration of the Rights of
among the first group of countries the euro area as a whole, but
Man and of the Citizen' of
to introduce the euro on 1 January economic growth is slow.
1789 is the world's first
1999. Euro notes and coins
universal declaration of human GDP grew an estimated 1.6% in
entered general use on January 1,
rights, applying not only to 2010, and is forecast to grow by
2002, replacing the French Franc.
French citizens or "free men“, 1.8% this year, as such the policy
but to all people in the world. France's economy is in the midst focus is shifting from crisis
of shifting from extensive management to strengthening the
Culture France is famous for
government ownership and foundations of the economy. One
its literature. Notable authors
intervention to relying more on problem is to strengthening the
include Honoré de Balzac,
market mechanisms. The banking sector, which has come
Alexandre Dumas, Jules
government has already fully or under sustained pressure recently
Vernes, Marcel Proust, Jean-
partially privatized many large as a result of loans to troubled
Paul Sartre, and Antoine de
companies, banks, and insurers. euro area countries such as
Saint-Exupéry.
France's leaders pursue policies Greece. To support long term
Architecture Named after its that seek to maintain social growth, France needs to increase
designer, the Eiffel Tower was equality through laws, tax policies, flexibility in labor markets and to
built as the entrance arch for and social spending that aim to raise labor force participation, to
the 1889 World's Fair in Paris. reduce income disparity and further enhance domestic
Much criticized by the public mitigate the sometimes socially competition, and to eliminate
when it was built, the tower dislocating effects of economic market rigidities that constrain
has become the most globalization. Calibrating these supply and dampen export
prominent symbol of Paris. policies to have their intended performance.
effect can be challenging.
Sport The Tour de France is
one of the most popular Recent weak productivity growth
bicycle races in the world, with and low employment levels left
competitors covering more France trailing behind the top
than 2,200 miles of road. economic performers on a GDP
per capita basis. During the crisis,
Fun Fact French was the a decline in exports constituted a
official language of England significant drag on growth, but
for over 300 years (from 1066 domestic demand remained robust.
until the early 15th century).
Euro Challenge 2012
France’s Economy – Key Facts Economy The French
economy is the 8th largest in
• The Republic of France has a population of more than 64 million the world in terms of PPP.
people. It includes four overseas departments in Martinique, Agriculture Although France
Guadeloupe, Reunion and French Guiana. is the world's second-largest
• France is the second-largest trading nation in Western Europe agricultural producer and
(after Germany). The rest of the European Union is France's most contains about 17% of all
important trading partner, importing 62% of France's exports and agricultural land within the EU-
supplying 59% of its imports. 27, agriculture accounts for
only 1.8% of GDP.
• The World Economic Forum (WEF) Global Competitiveness Report
for 2011/2012 ranked France 18th out of 139 countries in terms of Demographics Though
competitiveness. The country’s infrastructure is among the best in France’s demographic profile
the world (ranked 4th). Health, education and innovation are other continues to age, its fertility
clear strengths. On the other hand, France’s labor market efficiency rate has been rising since the
continues to be ranked low (60th) because of the rigidity of wage 1990s and is now close to
determination and the strict rules on firing and hiring, as well as replacement level.
poor industrial relations in the country. Pension In 2010, the French
• The World Bank’s Doing Business Report ranked France 26th out of government said it plans to
183 countries. increase the retirement age
from 60 to 62 by 2018.
• According to the European Commission’s Spring 2011 forecast, for
2011 real GDP will grow by 1.8%. In 2012, GDP is expected to Labor Market While the
grow by 2.0%, supported by domestic demand. Macroeconomic French labor market has
stability still raises alarm bells for the future: The deficit reached undergone some significant
• 4.9% of GDP in 2010, but is expected to decrease in 2012. While reforms, it is still highly rigid
the deficit is set to improve in 2011, government debt is 84.7% of with a low participation rate
GDP. and a high minimum wage.
• France has committed in its 2010-2013 Stability Program, Unemployment France has
presented to the European Commission on 1 February 2010, to been struggling with high
reduce its national deficit to 3% of GDP by 2013. unemployment rates for
decades. After reaching a low
of 7.2% in June 2008, the
References unemployment rate has risen
• http://delicious.com/eurochallenge/France steeply and stood at 9.5% as
• http://ec.europa.eu/economy_finance/eu/countries/france_en.htm of May 2010.
• http://europa.eu/abc/european_countries/eu_members/france/ Tourism With at least 75
• www.oecd.org/france million foreign tourists a year,
France is the most visited
• http://www.imf.org/external/country/FRA/ country in the world and
• http://www.doingbusiness.org/ExploreEconomies/?economyid=70 maintains the third largest
• https://www.cia.gov/library/publications/the-world- income in the world from
tourism.
factbook/geos/fr.html