Reprises
Authors:   Département des diagnostics de l'OFCE, Sigogne Philippe , Fouet Monique , Adda Jacques , Fricke Thomas , Rifflart Christine , Milewski Françoise , Coquet Bruno , Daniel Jean-Marc , Fayolle Jacky , Péléraux Hervé 
Published: October 2008

The slowdowns that had started in 1989 had been disrupted by two sorts of events. On one hand they had been magnified by the Gulf crisis ; on the other one they had been weakened or delayed in some european countries by the reunification of Germany. Today the worse is behind us. 1992 will be the year of the recovery in almost all OECD countries.

In the United States the budgetary policy had no room of manoeuver left and the monetary policy, easy as it was, could hardly impulse the recovery all by itself. Firms and households had to be given enough time to recover a healthier financial situation before they could increase their spending again. This is done by now. In Japan by contrast a lot remains to be done in the field of mopping up the consequences of an excessive investment based upon speculation.

In many european countries financial situations have recovered enough to support some growth. The obstacle here is a financial one. Upstarts will therefore be jerky, but things will get progressively easier owing to the constraints that will eventually force the Bundesbank to alter its attitude. In Germany itself the first half will be one of quasi- recession. This country will be one of the last ones to enjoy a recovery ; it will nevertheless be spared high unemployement.

In France the recovery has been waited upon for many months now despite reasonable hopes. At the end of 1991 businessmen kept on worrying about their profits ; therefore they once again slowed production and diminished both employment and capital spending. Encouraging signs on the demand side during the first quarter probably mean that the bulk of physical adjustment is over. Still, the persistent monetary tension seems to block liquidity needs and to make financial balances more vulnerable.

The only way for french economic growth to be faster than in 1991 would be to benefit from a monetary easing negotiated on the european level. Such an easing, be it feeely accepted or imposed by events, should become a reality before summertime and allow for a_1.9 % Gdp growth on an annual average basis. Meanwhile, firms will go on reducing employement. Next, seeing their profits and productivity increase while interest rates diminish, they will start investing again. Capital spending, which would still decline in 1992, should increase by 5 % in 1993. By then, productive capacities will cease to be underutilised.

The growth of personal income will be moderate and largely due to that of transfer payments. Small increases in wages and salaries, high unemployment and soaring health expenditures will once more point to a deficit of the social budget. Social security contributions will then inevitably be raised again. A decrase of 0,8 % over two years of the savings rate will account for half of the acceleration in household consumption expenditures.

French competitiveness is definitely improving. This will sustain the recovery and limit the deterioration of the trade deficit. Current account deficit will remain near 0,5 % of Gdp throughout 1992 and 1993. Despite the fact that economic growth will accelerate in 1993, reaching a 3,5 % annual rate, unemployment will increase further. The 3 millions figure might be reached soon.