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France’s economy is likely to “flirt with stagnation” throughout the year, despite the small rebound in GDP in the last quarter, predicts Dutch bank ING.
Charlotte de Montpellier, ING’s senior economist for France and Switzerland, explains:
The additional customs duties in the US and their direct and indirect impact will delay the French economy’s rebound. We estimate that the direct effect of a permanent 10% import duty in the US on French GDP (via a reduction in exports) will be around -0.1%.
Adding to this are the effects of uncertainty, the global economic slowdown and more restrictive fiscal policy, all of which will weigh on French economic activity throughout the year. The cooling in the labour market is likely to limit the recovery in household consumption, and the savings rate is set to remain high.
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