PARIS, Dec. 27 (Xinhua) -- The French economy,
buffeted by the rising euro against U.S. dollar and high oil prices, coupled
with problems within the economic system, is expected to face a tough year in
2008. Many international organizations and economists believe that the French
economy is unlikely to register marked growth next year.
France's Gross Domestic Product rose by 0.6 percent,
0.3 percent and 0.7 percent in the first three quarters of 2007. With an
inflation rate of 2.0 percent, and the prospects for the industrial sector
remaining bleak, French growth is estimated to stand below 2.0 percent this
year, lower than the government's forecast of 2.0 percent to 2.5 percent,
according to the statistics body INSEE.
In 2006, the country's trade deficit reached a
record-high of 29 billion euros (about 42 billion U.S. dollars). In the 12
months from November last year to October this year, France's trade deficit has
jumped above 35.2 billion euros (about 51 billion dollars), expectedly to set
another new high in 2007.
High taxes and welfare and rigid labor laws in France
remain the major barriers to the sound development of its enterprises. High
taxes have forced many companies to move their production to other countries and
made France less attractive to foreign investors.
Since taking office in May, President Nicolas Sarkozy
has tried very hard to initiate economic reforms, but met with strong resistance
from various sectors, an indication that his endeavor to revive the country's
economy is not to be plain sailing.
Troubled by a strong euro, high oil prices and the
risk of global economic slowdown, "the course of reform could naturally be
affected," said the French newspaper Le Figaro in a report.
Many international organizations and economists are
pessimistic about French economic prospects next year. In the "World Economic
Outlook," the Organization for Economic Cooperation and Development (OECD) said
France's economic growth rate next year is unlikely to exceed 2 percent.
Managing Director of the International Monetary Fund
(IMF) Dominique Strauss-Kahn also said that an economic growth of 2.25 percent
for 2008 set by the French government was too optimistic, taking into account
the negative impacts of U.S. subprime mortgage crisis and subsequent financial
trouble on the economic performance of the United States and other European
countries next year.
On its road to economic growth, France is confronted
with many difficulties, which are hard to overcome within a short year. The
reform of its rigid and inefficient economic model has been a key factor to
revive the country's macro-economy.
Despite the strong wish of Sarkozy's government for a
"radical shake up" of the stagnant economy, the government's reform got to a
difficult and shaky start. It seems unrealistic to expect the reform to yield
tangible results and revive the French economy anytime soon.
Strong Euro against U.S. dollar has given French
enterprises a hard time, undermining their competitiveness. Some French industry
giants, such as Airbus and Renault Automobile, have repeatedly complained about
the big disadvantage of a strong euro. Shrinking profits force them to consider
outsourcing their production, thus further squeezing France's job market.
Lack of flexibility and innovation has also put many
French enterprises in an unfavorable position in economic competitions. For
instance, France lags behind the united States, Japan, Germany and other
competitors in innovation capacity in the fields of information and
communication technologies. Compared with their counterparts in other Western
countries such as the United Sates and Germany, French enterprises have lagged
behind in globalization process.
Analysts believe that euro would keep strong for a
while, and oil price will remain in the high territory in the foreseeable
future. Against this backdrop, analysts believe that the French government's
ongoing reform is unlikely to give the country's economy much boost, and 2008
will probably turn out to be a tough year for the French economy.
