PARIS (Reuters) – The International Monetary Fund (IMF) raised its growth forecast for the French economy in 2016, to “close to 1.5%” against 1.1% previously while advocating further reforms to reduce unemployment and public debt.
While the trade union challenge to the reform of the Labour Code tightens, the IMF points out in the preliminary findings of its annual review of the French economy that the law El Khomri, currently before Parliament, would be a further step to improve the French labor market.
the IMF’s forecasts are similar to those of the government, which confirmed its scenario of a rise 1.5% of gross domestic product (GDP) this year after the announcement of a 0.5% increase in the first quarter.
the European Commission and the OECD (Organization for cooperation and economic development) are less optimistic and expect growth respectively 1.3% and 1.2% in 2016.
The IMF then saw an annual growth of 1.75% on average over the next five years.
NO BALANCED bUDGET WITHOUT REFORMS NEWS
in this context of economic recovery, the organization based in Washington believes that budgetary efforts must be strengthened. It reported a structural fiscal adjustment effort “has slowed down and is almost nil”, stressing that the fall in the public deficit (3.6% of GDP in 2015) was mainly due to the economic recovery and the reduction of the debt burden.
“Without additional measures, France barely reach the goal of a public deficit of 3% of GDP in 2017 and the structural balance target seems out of reach in the next five years, “it said in the report released on Tuesday.
the IMF emphasizes that the fiscal consolidation program of the government is vulnerable to any new shocks to especially as it becomes increasingly difficult to find savings to offset potential new spending.
“Since there is virtually no room for budgetary maneuver, it is important that France does not miss the opportunity offered by the current economic recovery to increase efforts to restore its fiscal shock absorbers and sound public finances, “he considers.
” What we concern is that the fiscal effort slows the contrary, the economic recovery should be harnessed to strengthen and accelerate this effort, “said Christian Mumssen, head of the IMF mission to France.
While welcoming the measures taken by the government in recent years for the job market – like the pact of responsibility and solidarity, the tax credit for competitiveness and employment (CICE) or Macron still the law, the IMF points out that “to sustainably reduce unemployment and debt, additional efforts are needed”.
“the El Khomri law is important and necessary to facilitate the recruitment, increase competitiveness of the French economy and flexibility of the labor market, “said Christian Mumssen, also evoking the economy modernization component provided in the so-called anti-corruption law” Sapin 2 “.
the staff recommended a parallel overhaul of the unemployment insurance system, which is currently under discussion between the social partners.
They suggest increasing incentives to return to employment, such extending the minimum contribution period, or by introducing degression of benefits.
Among the other reforms mentioned tracks to improve the fiscal situation, the IMF points out that there are still avenues for economy likely to be implemented later “without weakening the French social model”.
He mentioned in particular for maneuver on pensions (to delay the age of actual retirement and streamlining plans special) and the health system (greater use of generics, cost rationalization in hospitals).
(Myriam Rivet, edited by Jean-Baptiste Vey and Yves Clarisse)
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