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EconomicPoliticalStructural

Euromoney Country Risk editor’s view

France has been governed under a hybrid presidential-parliamentary system since 1958.  The head of state is President Nicholas Sarkozy and the current head of the government is Prime Minister Francois Fillion.  Classified by the World Bank as a high-income country, France is also a member of the Organization for Co-operation and Economic Development (OCED). France’s main trade partners are other European countries. France’s main exports include high value added products such as machinery, aircraft, and plastics.  The country has been part of the Eurozone since its inception in 1999.  

France – Quick View
ECR score80.9 (Mar 2011)
ECR rank16 (Mar 2011)
Economic
GDP (2009)USD 2,658.94 billion
GNI per capita PPP (2009)USD 33,930
FDI inflow (2009)USD 59,844.67 million
Inflation (2010)1.7%
Central bank assets (2009)USD 701,232.35 million
Unemployment rate (2010 Q3)9.5%
Government deficit (2009)USD 201.33 billion
Tax revenue (2009)USD 1,105.63 billion
Political
Government typeSemi-presidential
Recent political crisisNA
Economic freedom score (2011)64th
Freedom of information score (2010)44th
Corruption perception index (2010)25th (-1 place)
Structural
Birth rate (Nov. 2010)12.7 per '000
Population balance (2011)Under 20 years - 24.7%
Population balance (2011)Above 65 years - 16.6%
Life expectancy years (2010)Male 78.1 years
Life expectancy years (2010)Female 84.8 years
Mortality rate (2005-2010)8.6 per '000
Literacy rate99%
Internet access (2010)68.9%

[Top] Economic Overview

France has the fifth largest economy in terms of GDP.  It is also the fifth largest exporter of durable goods and second largest exporter of services and farm products. The country’s major assets include tourism, research and development and services. Additonally,it has a highly skilled labour force.

 

France is among the most visited places in the world. In 2007, 81.9 million people visited France, compared with 59.2 million visitors for Spain and 56 million visitors for the United States.

 

The leading industrial sectors in the nation include construction and civil engineering, agrifood, and chemicals. The major export partners include Germany, Italy, Spain, Belgium, the UK and the US.

 

(Source: insee.fr)

 

Gross domestic product (GDP)

 

The country’s GDP growth rate has declined since 2007. The GDP growth in 2007 was 2.4%, which decreased to 0.2% in 2008 and further decreased to -2.6% in 2009. This was due to the drop in contraction of exports by 12.4%, a sharp fall in demand in enterprise sector from 2.9% in 2008 to -8.6% in 2009, a decline in the construction sector from 3% in 2008 to -6.1% in 2009 and a decrease in capital goods from 2.6% in 2008 to -11.9% in 2009.

 

(Source: National Statistics)

 

France GDP and GDP Growth Rate

(Source: National Statistics, World Bank, OECD)

 

GDP per capita

 

France GDP per capita

 

The country’s GDP per capita increased from 2005 to 2008. However, the GDP per capita decreased to USD 41,051 in 2009.

 

(Source: World Bank)

 

Gross national income (GNI)

 

The Gross National Income (GNI) for 2009 was EUR 1.92 million, compared to EUR 1.97 million in 2008. The GNI per capita amounted to EUR 29,814.2 in 2009.

 

(Source: National Statistics)

 

Year

2009

2008

2007

2006

2005

2004

2003

Gross National Income (EUR '000)

1,922.8

1,968.0

1,917.3

1,824.1

1,737.2

1,673.3

1,604.8

 

The GNI per capita at PPP was registered at USD 33,930 in 2009.

 

(Source: World Bank)

 

Inflation rate

 

Inflation rate increased from 0.1% in 2009 to 1.7% in 2010. Specifically, inflation in 2008 doubled from the previous year to 3.2%, before declining to 0.1% in 2009.

 

France Inflation Rate

Income tax rate

 

Income tax on individual income in France is taxed progressively from 5.5% to 40%. 

 

Income (EUR)

Tax (%)

Till 5,687

0

5,687 - 11,344

5.5%

11,344 - 25,195

14%

25,195 - 67,546

30%

Above 67,546

40%

 

Corporate tax rate

 

Corporate tax rate is 33.33%.

 

(Source: worldwide-tax)

 

Tax contribution

Total tax rate (% profit)

Corporate income tax

8.2

Social security tax

45.6

Fuel tax

1.4

Value added tax (VAT)

19.6

(Source: doingbusiness.org)

 

Foreign direct investment

 

Year

2009

2008

(EUR million)

Foreign Direct Investment

-63,010

67,458

Outward

-105,933

109,959

Inward

42,923

42,501

 

Portfolio investment

 

The Portfolio investment in 2010 (Jan – Oct ) amounted to EUR 215.5 billion as compared to EUR 237.8 billion in 2009.

 

Time Period

2010 (Jan – Oct)

2009

2008

2007

Portfolio Investment (EUR billion)

215.5

237.8

89.4

-121.0

 

(Source: National Statistics, Central Bank)

 

Banking assets

 

The total central bank assets amounted to EUR 502,952 million, with a decrease of 8.6% over the previous year.

 

Bank Assets (EUR million)

2009

2008

Gold

60,006

49,802

Foreign Exchange Rates

37,771

86,986

Relations with IMF

13,136

2,323

Euro-denominated claims  on non-euro area residents

2,940

5,793

Euro-denominated loans to euro area credit institutions

132,652

155,174

Euro-denominated securities  issued by euro area residents

68,717

68,740

Relations within the Eurosystem

84,087

85,322

Euro and foreign currency financial assets

97,485

86,885

Miscellaneous

4,851

7,854

Fixed assets

1,308

1,329

 

(Source: Central Bank)

 

Non-performing loan ratio

 

The gross non-performing loans were 90.7%, with an overall cover ratio of EUR 124.5 billion in December 2009.

 

(Source: Central Bank)

[Top] Financial Indicators & Government Financial

Consumer price index

 

The consumer price index rose sharply from 2008 to 2010. The growth in prices of oil and food products accounted for the increase in the CPI. This rise in prices was counterbalanced by a decline in prices of tourism services and some manufactured products.

 

(Source: National Statistics)

 

France Consumer Price Index

Base Year: 2005 = 100

 

(Source: National Statistics)

 

Producer price index

 

The Producer Price Index dropped to -6.4% in 2009, while hovering above the 3.5% mark during Apr-Sep 2010. The PPI for September 2010 was 4.3. There was a decline in PPI in 2009 because of a decrease in the prices of oil products. There was also a drop in the prices of food products, beverages and tobacco. The increase in 2010 was primarily due to the rise in prices of the refined petroleum products (0.8%), food products (0.8%), transport equipment and the manufactured products (0.3%).

 

France Producer Price Index

(Source: Central Bank , National Statistics)

 

Interest rate on savings deposits

 

Month

Rate on Deposits

Rate on Deposits < 2 years

Rate on Deposits > 2 years

(%)

Nov-10

0.97

2.14

3.15

Oct-10

0.95

2.17

3.13

Sep-10

0.93

2.15

3.24

Aug-10

0.90

2.11

3.20

Jul-10

0.79

1.95

3.20

Jun-10

0.78

2.06

3.17

May-10

0.81

2.23

3.21

Apr-10

0.80

2.20

3.27

Mar-10

0.81

2.23

3.25

Feb-10

0.88

2.37

3.44

Jan-10

0.89

2.31

3.31

 

 

(Source: Central Bank)

 

Interest rate on time deposits

 

Time Period

Oct 2010

Sep 2010

Aug 2010

July 2010

Dec 2009

Dec 2008

Dec 2007

Deposits with agreed maturity up to two years

Households and similar

25.1

25.4

26.1

25.3

30.4

62.4

48.2

Non-financial corporations

60.6

57.9

57.3

56.1

55.1

58.8

45.1

General government

0.7

0.8

0.8

0.8

0.6

0.8

0.6

Other sectors

51.9

47.1

45.9

45.8

45.1

63.4

33.8

Total Outstanding amount

138.4

131.2

130.1

128.0

131.3

185.3

127.8

Deposits with agreed maturity above two years

Households and similar

242.8

242.8

242.5

242.4

241.4

223.2

245.2

Non-financial corporations

31.5

31.1

30.3

29.8

22.5

13.3

9.8

General government

0.6

0.6

0.6

0.6

0.4

0.1

0.0

Other sectors

91.7

96.3

100.6

99.9

98.1

24.4

22.2

Total Outstanding amount

366.6

370.7

374.0

372.7

362.4

260.9

277.2

 

(Source: Central Bank)

 

Money supply

 

The money supply for December 2010 was  EUR 1,924,389 million, compared to the previous years EUR 1,901,250 million.

 

(Source: National Statistics)                

 

Public debt level

 

The public debt level also known as gross debt, amounted to EUR 1574.6 billion in 2010 Q3, showing a decrease of EUR 16.9 billion from the previous quarter in the same year.

 

France Public Debt

(Source: National Statistics)

 

Government expenditure

 

The total government expenditure for 2009 was EUR 1,067.7 billion. 42% of the expenditure was in the social protection sector, followed by 15% in the health sector, 13% in the public services general sector and 11% in the education sector.

 

France Distribution of Government Expenditure

(Source: National Statistics)

 

Official exchange rate

 

The official exchange rate (EUR/USD) for January 2008, 2009 and 2010 were 1.47, 1.32 and 1.43 respectively.

 

France Exchange Rate

(Source: Central Bank)

 

Government finances

 

Sovereign debt dynamics

 

Public sector borrowing Rrequirement/fiscal balance

 

The general government borrowing requirement in 2009 increased to EUR 144.4 billion from EUR 65 billion in 2008.  The central government and social security agencies deficits amounted to EUR 117.6 billion and EUR 24 billion in 2009 respectively.

 

(Source: Central Bank)

 

Total revenue

 

The total revenue collected by the government in 2009 was EUR 923.4 billion.

 

Year

2009 (EUR billion)

Total Revenue

923.4

Production Revenue

66.5

Production in industry sales and residual

54.0

Production for own final use

1.7

Partial payments of households

7.6

Other subsidies on production

3.2

Property income

15.2

Interest

4.0

Property income other than interest

11.2

Taxes and social contributions

825.2

Taxes on production and imports

284.7

Current taxes on income and wealth

186.8

Capital taxes

7.5

Transfers of tax revenue

351.8

Social contributions

36.0

Taxes and assessments due uncollectible net

-5.5

Other transfers

16.4

Other current transfers

15.3

Capital transfers

1.1

 

(Source: National Statistics)

 

Tax revenue

 

The tax revenue amounted to EUR 793 billion in 2009, declining 5.1% from the previous year. Social security funds contributed to 54.4% of total revenues, followed by 30.5% and 14.7% of revenues collected from central and local government respectively, and only 0.5% of revenues from institutions of the European Union.

 

(Source: National Statistics)

 

Type of Tax

2009 (EUR billion)

Taxes by the central government

241.8

Taxes by the local government

116.4

Taxes on the social security funds

431.0

Taxes by the institutions of the European Union

3.8

Total Taxes

793.0

(Source: National Statistics)

 

Current account balance

 

The recent fall in trade balance was because of lower oil imports, which reduced the supply of natural hydrocarbon and slowed activity of ports and refineries. 

 

Year

Export

Import

Balance

(EUR million)

2009

345,956

390,125

-44,169

2008

417,354

473,337

-55,983

2007

406,485

448,979

-42,494

2006

394,621

424,549

-29,928

2005

360,376

384,588

-24,212

2004

345,256

350,996

-5,740

2003

327,653

327,884

-231

2002

333,423

329,875

3,548

2001

335,219

336,753

-1,534

 

The account balance for the year 2010:

 

Year

Export

Import

Balance

(EUR million)

Oct-10

32,389

35,820

-3,431

Sep-10

32,766

37,144

-4,378

Aug-10

34,002

38,732

-4,730

Jul-10

34,006

37,706

-3,700

Jun-10

33,093

36,652

-3,559

May-10

29,738

35,148

-5,410

Apr-10

31,760

36,216

-4,456

Mar-10

31,543

36,047

-4,504

Feb-10

30,612

34,035

-3,423

Jan-10

30,404

34,144

-3,740

 

(Source: National Statistics)

 

Balance of payments

 

Balance of Payments (EUR billion)

Year

Trade in Property

Trade in Services

Total Trade

Revenues

Current transfers

Current Account

Capital Account

2010 (Jan-Oct)

-52.5

12.2

-40.3

28.0

-25.9

-38.3

-0.2

2009

-46.7

10.4

-36.3

18.5

-24.3

-42.1

0.3

2008

-59.1

14.5

-44.6

24.8

-24.2

-44.0

0.7

2007

-40.5

14.5

-26

24.8

-24.2

-18.9

0.7

 

(Source: National Statistics, Central Bank)

[Top] Labour Force and Employment Overview

Labour Force

 

The country’s had a total labour force of 28,694,000 in 2009.

 

(Source: OECD)

 

Age Group

Employment rate (%)

15-24 years

31.4

25-54 years

82.1

55-64 years

38.9

 

Labour force participation rate

 

The labour force participation rate for 2009 was 70.4% as compared to 69.6% in the year 2005.

 

Year

Participation rate (%)

2009

70.4

2008

69.9

2007

69.7

2006

69.6

2005

69.6

(Source: National Statistics)


Unemployment Rate

 

The labour force participation rate for 2009 was 70.4% as compared to 69.6% in the year 2005. The unemployment rate in 2010 Q3 was recorded at 9.7%.

 

(Source: National Statistics)

 

France Unemployment Rate

(Source: National Statistics)