Economic crisis in France - Essay Example

Download file to see previous pages The ills of lowdown are being experienced by the citizens of France. The citizens of the country are facing hard times in order to pay off their loans. The financial crisis led to loss of job opportunities and therefore the citizens did not have enough money on their hands to serve the basic requirements. The citizens are getting inclined to secure loans and debt to serve their finances. France has not been capable enough to direct foreign direct institutions into the country and financial crisis did not excluded France from shedding the ill effects. Performance of the French economy It is noted that the country of France suffered from low productivity as well as employment losses in the phase of 2008. But the impact of the crisis has been relatively less on France as compared to other advanced countries. The recovery phase has been sluggish for France. The country partly excluded itself from the asset price shocks. The above figure shows the loss and the recovery for France. The other panel shows the loss in employment and recovery. The country has been less open over the decade or so, therefore it experienced steady loss of export compared with the European partners. The current account balance deteriorated steadily while the reduction in openness ratio was 9 percentage points in the decade of 2000 to 2010 (European Commission, 2009). The lower degree of openness cats as the constraint in limiting the capability of the economy to rebound itself in the short run. It also limits the progress of the economy in the medium term. Experts opine cyclical effects of the recent decline as the share of the capital income for the residents of France is far behind from that of the European partners. The figure below will act as the evidence regarding the performance of the macroeconomic indicators for France. (International Monetary Fund, 2012, pp. 1-5). The economy of France is showing no progress for the fourth consecutive year. The early part of 2012 showed a sign towards returning towards the path of growth. The tensions in the financial markets were eased by the effective monetary policies of the European Union. Growth process may get hindered by the weak trade prospects and further austerity measures. The economy is expected to remain flat in the recent future and recovery process will take place from 2014. The lack of domestic demand can be accounted to be the reason. The consumption of household and residential investment is held back by rise in the level of unemployment and reduction in real disposable income. The exports are expected to grow in 2013 but the conditions of the Euro area are not too good for the cause. The authority has announced an injection of 30 billion Euros and the rate of tax has been raised for the high income earners. The aim is to reduce the fiscal deficit from 4.5 to 3% of GDP. The growth rate assumed for 2013 is 0.8%. The lending towards the private sector will still remain flat. The unfolding of the events in the neighbouring countries will have severe effects on the prospects of the economy of France (National Institute Economic Review, 2012, p. 5). The President of France has promised in a reduction in forecasts in budget deficits to 3% of GDP. The growth forecast for 2012 was 0.5% while that of 2013 is 1.7%. According to some experts the deficit will slip to 5% in ...Download file to see next pages Read More