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MNI (London)
By Luke Heighton
     FRANKFURT (MNI) - The eurozone's current macroeconomic environment is
"unquestionably less favourable than anticipated a few months ago," the First
Deputy Governor of the Bank of France said Tuesday, with France expected to grow
faster than Germany in 2019.
     Here are the key points from Denis Beau's speech in Strasbourg:
     --In line with the rest of the world, France's economic growth is slowing,
albeit to a lesser extent than in some other European countries thanks to a rise
in purchasing power and robust domestic demand. "In 2019, France should grow at
a pace faster than in Germany, and close to the average pace for the euro area."
     --Debt levels among economic agents, including those in France, remain
high, Beau said -- in stark contrast with the trends observed in neighbouring
European countries and other advanced economies. "The downward revision to
growth forecasts raises even greater concerns over the sustainability of this
debt and the amplifying role it could play in the event of an upward shock to
interest rates or a downward shock to activity," he added. 
     --Increased macroeconomic and geopolitical uncertainty is also weighing on
markets. Valuations still "seem elevated in a medium-term perspective", raising
the risk of abrupt and marked downward corrections in financial asset prices in
a market liquidity environment that has become more fragile since the last
financial crisis. 
     --Further downward revision to growth forecasts could prolong the current
low interest environment which, despite being overall consistent with the
macroeconomic situation, "still has implications for more economic agents'
borrowing and for the weaker profitability of financial intermediaries," Beau
--MNI London Bureau; tel: +44 203-586-2225; email:
[TOPICS: M$E$$$,M$F$$$,M$X$$$,M$$EC$]
MNI London Bureau | +44 203-865-3812 |