IMF: France President Macron Has 'Unique Window' for Reforms

--Major Risk Is That Implementation Is Derailed by Protests

By Jack Duffy

     PARIS (MNI) - French President Emmanuel Macron has a "unique window" to

enact a bold package of reforms to tackle France's long-term economic problems,

the International Monetary Fund said Thursday. 

     In a so-called Article IV report on the French economy, the IMF said solid

economic growth and falling unemployment for the rest of the decade should

create space for Macron to rein in government spending and boost France's weak

competitiveness.  

     "With a strong mandate, the government has now a unique window of

opportunity for a bold and comprehensive economic reform package, as the

recovery is gaining pace and job creation is picking up," the IMF report said.

     The IMF forecast that the French economy will grow by 1.6% this year and

1.8% in 2018, roughly in line with government estimates of 1.7% for both years.

The Fund is more pessimistic on France's deficit outlook, however, estimating

budget shortfalls of 3.0% of GDP for this year and next, compared with forecasts

of  2.9% and 2.6%, respectively, by the government. 

     "Major efforts are needed from the start to meet 2017/2018 deficit targets,

with many measures yet to be specified," the IMF said.

     The Fund sees French unemployment dropping steadily as the economy expands,

declining from 10% last year to 9% by next year and 8% by 2021. 

     The major risk to the forecast is that reforms are derailed by public

opposition, the IMF said. 

     "Eventual political or social resistance to the government's policies could

complicate the social dialogue and undermine business sentiment, slowing

investment and hiring," the IMF said. 

     "It could also derail fiscal consolidation, leading to an entrenchment of

the budget deficit and public debt at current high levels," the report said. 

     Protests over Macron's reforms have been heating up but so far not reached

levels that have caused previous governments to backtrack. Some 200,000 union

members marched on Sept. 12 to protest labour market reform measures and more

demonstrations are planned over the next 10 days by both unions and Macron's

left-wing political opposition. 

--MNI Paris Bureau; tel: +33 1-42-71-55-41; email: jack.duffy@marketnews.com

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