The French economy shrank in the fourth quarter as manufacturers slashed thousands of jobs and President Francois Hollande struggled to keep the nation from falling back into recession for the first time since 2009.Gross domestic product dropped 0.3 percent in the fourth quarter from the previous three months when it climbed 0.1 percent, the national statistics office Insee in Paris said today in an e-mailed statement. Economists had forecast a 0.2 percent drop, according to the median of 28 estimates in a Bloomberg News survey. GDP fell 0.3 percent from a year earlier.France, like others among the 17 nations using the euro, is suffering in the wake of the region’s sovereign debt crisis. Yet while neighboring Germany is showing signs of recovery in confidence, exports and manufacturing, Hollande is grappling with tens of thousands of job cuts in companies such as Renault SA and an economy that has barely grown in more than a year.
Thursday, February 14, 2013
French GDP Shrinks Amidst Surging Stock Market
More signs of today’s financial market-real economy disconnect or the parallel universe.
I earlier posted about the "surprise" recession in Japan, in spite of the “Abenomics” (aggressive monetary and fiscal interventionism), which has bizarrely been viewed by media as justifying more stimulus; after all previous attempts failed.
Add to this the latest development: the contraction in the French economy
Whether seen from quarter on quarter…
the French statistical economy has been deteriorating since 2011. (both charts from tradingeconomics.com)
But the French equity benchmark the CAC 40 apparently sees things starkly different from main street. (chart above from stockcharts.com)
One cannot really expect any significant real economic recovery when the Hollande regime has been on an onslaught against capital via class warfare policies and via various economic interventionism. This means that much of the French asset inflation will depend on the continuing bubble blowing policies by Mr. Draghi and his team at the ECB.
Nonetheless if the economic contraction deepens this may lead to a French debt crisis that may spell doom for the ill-fated EU project.