By William Horobin
A steady uptick in French economic growth at the end of the year and the start of 2017 will be tested by political uncertainties, national statistics Insee said Thursday in its economic outlook.
The French economy is set to gather momentum after a weak patch over the summer, Insee said, just as the country braces for unpredictable presidential elections and as business leaders and consumers try to gauge the impact of Donald Trump's election and the U.K. vote to exit from the European Union.
"The uncertainties surrounding fiscal policies and the political situation are great as the year draws to a close," the national statistics agency said in its economic outlook. "For the moment, these uncertainties do not seem to be affecting the business climate, but depending on how they evolve, they could increase the wait-and-see attitude among investors," Insee said.
Insee said economic growth will rebound to 0.4% quarter-on-quarter at the end of 2016 after only 0.2% in the third quarter and a contraction in the second. In the first quarter, the pace will slow slightly to 0.3% before returning to 0.4% in the second, according to the forecasts.
The statistics agency expects slight acceleration as a positive business climate feeds through into improving investment levels. Agricultural production should rebound in 2017 after cereal and wine-growing revenues took a hard hit from poor climate conditions this year.
Construction will also increase robustly after sharp declines for more than two years and household spending will rebound after flatlining in the second and third quarters of this year, Insee said.
The uncertainty around Insee's outlook comes as candidates in May's presidential elections have starkly different economic programs.
National Front leader Marine Le Pen, who is poised to make it to a second round runoff in May, is running on a protectionist platform and a pledge to free France from the constraints of the European Union. She will likely confront François Fillon, the surprise winner of the center-right primary who is promising to slash spending and carry out unpopular overhauls of pensions and welfare.
On the left, a broad spread of Socialist candidates are competing in a January primary after President François Hollande pulled out of the contest. Some candidates in the primary say they would cast aside EU spending constraints in a bid to stimulate growth with fiscal expansion.
Write to Will Horobin at email@example.com
(END) Dow Jones Newswires
December 15, 2016 12:14 ET (17:14 GMT)
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