France’s Path Not Taken

The new president of France, be it Nicolas Sarkozy or Ségolène Royal, will face a tough challenge when it comes to putting the French economy back on its feet. While the world economy is booming for the fourth consecutive year, with a historically unprecedented growth rate of about 5%, the French economy is limping. In 2006, it grew by only 2.2%, while growth rates of only 2.1% and 1.9% can be expected for 2007 and 2008, respectively, according to a recent forecast by the German Economic Research Institutes. This is significantly below the average of the old EU countries for these three years – 2.7%, 2.6%, and 2.4%, respectively.

France is currently one of Europe’s laggards, only slightly ahead of Italy and Portugal. Even Germany is performing better. With a growth rate of 2.7%, the German economy clawed its way back to the average of the old EU countries in 2006, and it can be expected to grow at 2.4% in 2007 and 2008, far faster than France.