Fiscal watchdog says new French growth forecasts plausible

PARIS (Reuters) – France’s independent fiscal watchdog said on Friday that the government’s updated economic forecasts for 2018 and 2019 were plausible but the outlook afterwards was optimistic.

President Emmanuel Macron’s government forecast on Tuesday growth of 2.0 percent before activity starts easing slightly in 2019, revising its estimates up from 1.7 percent for both years previously.

Thanks to the improved outlook, the government said it expected to cut the public sector deficit and debt faster than previously expected and even book France’s first budget surplus in 48 years at the end of Macron’s term in 2022.

The High Council on Public Finances, which is by law required to judge the government’s forecasts, said the growth 2018 estimate was “realistic” and the 2019 forecast was “reachable”.

Looking further out, the council was more doubtful the economy could maintain the 1.7 percent annual growth rates forecast by the government until 2022, which it is counting on to steadily reduce the deficit.

“This scenario for the public finances relies on an optimistic growth outlook,” the Council said in a statement.

It added that the government would have to strictly stick to its spending reduction plans to keep to its deficit reduction on track.

Macron’s government has resisted calls from within his party to loosen some spending after last year’s deficit came in better than expected.

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