France’s National Institute of Statistics and Economic Studies (INSEE) has said that anti-government protests hit economic growth in 2018, as consumer spending tapered off toward the end of the year, according to AFP.
The so-called “Yellow Vests” protests hindered many shoppers from going out ahead of the Christmas holidays. Road blockades also kept goods and supplies from reaching stores and businesses, causing production bottlenecks and shortages. Dozens of shops were ransacked and cars burned in Paris and other cities during the weekly Saturday protests that erupted in mid-November.
France witnessed a 2.3% GDP growth in 2017 after Emmanuel Macron swept into the presidency with his pledge to revive the French economy through pro-business reforms, while in 2018 it expanded just by 1.5%. Exports rose 3.1% last year after a 4.7% jump in 2017, while imports rose just 1.1% last year after climbing 4.1% in 2017.
In a report issued on Wednesday January 30th, INSEE’s statistics show that consumer spending was stagnant in the fourth quarter after edging up 0.4% in the previous three months, dropping the government's growth target of 1.7%, amid economists’ warnings of gathering risks that could jeopardize a recovery in 2019.
Despite Macron’s pledge of a reduction in residential taxes, which came into effect in late 2018 in response to the protests, French shoppers were not sufficiently enticed to have an effect on growth.
Household spending slumped, falling 0.4% in the final three months of the year, INSEE said, while growth in investment by companies slowed to 2.9% from 4.7% in the third quarter.
INSEE's main readings revealed that the French economy is facing headwinds and trade tensions between Europe, China and the US under the protectionist policies of President Donald Trump.
Looking ahead, the uncertainty surrounding Britain's looming exit from the EU and higher oil prices could also derail the French government's hopes of a rebound this year.
"If oil prices keep rising, if home construction keeps slowing... and if businesses pull back on investing, French growth could plunge," said Patrick Artus, chief economist at the investment bank Natixis.
In such a scenario, Artus says French economic growth risks falling "below one percent" for the year.