French Protests Expected to Only Have Limited Economic Impact

(Bloomberg) -- Protests against Emmanuel Macron’s plan to overhaul pensions will have limited impact on economic growth, especially if unions suspend their action during the holiday season, according to France’s statistics agency.

Even if some sectors like transport take a hit from the shutdowns, Insee said the overall macroeconomic impact of past strikes in France has tended to be “moderate.” The most prolonged walkouts, in late 1995, took 0.2 percentage point off one quarter of growth, according to its estimates.

However, economist Julien Pouget noted that if the disruption continued throughout the entire Christmas holiday period and remained as intense, forecasts could be revised down.

The economic impact of the strikes will be a significant bargaining chip in the face-off between Macron and the country’s labor unions. The more leftist unions have said they are prepared to continue strikes through the end of the year, while others have said they could call a truce until January.

Insee can’t estimate how long the walkouts will last and didn’t account for them in its outlook for the first half of 2020.

It sees the expansion slowing slightly to 0.2% in the first three months of the year as a slowdown in trade hurts exports. Growth will return to 0.3% in the second quarter -- helped by consumer spending.

The statistics office left its 2019 GDP forecast unchanged at 1.3%.

To contact the reporter on this story: William Horobin in Paris at whorobin@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jana Randow

©2019 Bloomberg L.P.