France's economy grew at its fastest pace in two years, receiving a boost from production and consumer spending, while benefiting from low oil prices. Industrial production was its strongest in four years, and consumer spending rose 1.6 percent in the first quarter.
So far, the French economy is on a steady course for growth, as predicted by the government and economists. The European Commission expects a growth rate of 1.1 percent for 2015, and the government expects a minimum 1.0 percent growth in the same year. President Francois Hollande, who promised not to seek reelection in 2017 if the high unemployment situation does not improve, still needs to contend with the overall jobless rate in his country.
France's Employment Problem
French unemployment is over 10 percent, with 3.5 million citizens unable to find work. According to projections, the employment rate will only fall from 10.2 percent in 2015 to 9.3 percent in 2017. It remains questionable as to whether Hollande will seek another term if such a figure pans out, but the current situation remains troubling. More people fell out of the workforce in March, and the upticks in the economy have not translated into the job sector. Experts believe that France must grow at least 1.5 percent to create more jobs. Hollande has taken such measures as lowering tax rates to spur job creation and opening up certain sectors of the economy to investment.
Hollande may also grow France's economy through stronger international ties. The president is forging closer bonds with the Caribbean by making a rare visit to Haiti, which was France's former colony, and venturing to Cuba and calling for an end to the U.S. embargo. France and Cuba also came together for an oil exploration deal in the Gulf of Mexico.
Signs of Progress
France faces a tough road ahead, but experts are more hopeful about the economy than before. French officials aim to shrink the budget gap by 2.7 percent by 2017, but analysts predict the government will not follow through on greater deficit reduction. The French central bank growth forecast is 0.3 percent in the second quarter. The bank attributes the gain to industrial output. However, the forecast states that construction will suffer and France's export sector may have a tougher time gaining a share of the European market, as Germany's export capacity has been a leading force in Europe. Externally, the European Central Bank's QE policy, which lasts until 2016, may also provide an extra boost to the French economy.