PARIS: France’s longest transport strike in decades over a sweeping pensions overhaul hit economic growth, causing a rare contraction in the last quarter of 2019 and a below-par figure for the full year, statistics showed on Friday.
GDP growth slowed to 1.2 per cent for 2019 as a whole, statistics office INSEE said, weighed down by a 0.1 per cent contraction in the last three months of the year — the first quarterly fall since April-June 2016.
INSEE had originally tabled growth of 0.3 per cent last quarter.
The government, which started off last year aiming for 1.7 per cent growth, had hoped a series of tax cuts and wage boosts for low earners would cushion the blow from the “yellow vest” protests that faded only toward last summer.
But the massive strike launched on December 5 against President Emmanuel Macron’s pension reform kept many shoppers away from stores during the crucial run-up to the year-end holidays.
Restaurants and a wide range of retailers complained that sales had slumped by a third or more, in particular in Paris, where metro traffic essentially ground to a halt until just a few weeks ago.
INSEE said consumer spending dropped 0.3 per cent in December alone, though for the quarter spending grew by 0.4 per cent.
Business investments also plummeted, with fourth-quarter growth of just 0.3 per cent after a 1.3 per cent jump the previous quarter.
Economists had warned that a broad slowdown in growth worldwide had weighed on French exports last year, prompting executives to hold back on spending.
Finance Minister Bruno Le Maire called the outcome a “temporary slowdown that does not call into the question the fundamentals of French growth, which remain solid.”
He insisted in a statement that “household spending and business investments are holding up.”
But while France outperformed many EU countries — its GPD grew twice as fast as in Germany last year — economists warn of growing headwinds from trade tensions with the US, the fallout from Brexit and uncertainties about China’s prospects.
Separately Spain said its 2019 growth came in at 2.0 per cent, below the government’s forecast for 2.1 per cent.
Italy meanwhile saw anaemic growth of just 0.2 per cent for the year, with the fourth quarter shrinking 0.3 per cent compared with the third.
The full-year French slowdown was a marked decline from the 1.7 per cent growth chalked up last year and the revised 2.4 per cent expansion in 2017, when Macron took office pledging to enact far-reaching reforms to uncork France’s economic potential.
— AFP
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