MBA France

French Economy

France is in the midst of gradual conversion from a wealthy modern and new economy that has centred extensive government ownership and intervention to one that relies more on market mechanisms. The government has partially or completely privatized many important companies, banks, and insurers. It retains controlling stakes in several leading firms, including Air France, France Telecom, Renault, and Thales, and is dominant in some sectors, particularly power, public transport, and defense industries. The telecommunications sector is step by step being opened to competition. France's leaders remain committed to a capitalism in which they maintain social equity by means of laws, tax policies, and social spending that reduce income disparity and the impact of free markets on public health and welfare.

The government took urgent measurements and has lowered income taxes and introduced measures to boost employment and reform the pension system. Besides, it is focusing on the problems of the high cost of labor and labor market inflexibility resulting from the 35-hour workweek and restrictions on lay-offs. The tax burden remains one of the highest in Europe (nearly 50% of GDP in 2005). The lingering economic slowdown and inflexible budget items have pushed the budget deficit above the eurozone's 3%-of-GDP limit; unemployment stands at 10%.

In short the Government economic policy aims to promote investment and domestic growth in a stable fiscal and monetary environment. Creating jobs and reducing the high unemployment rate is the top priority of the French Government.

Economy Statistics

These are some of the most important statistics of France's economy :

Economy of France Currency 1 Euro = 100 eurocent Fiscal year Calendar year Trade organisations EU, WTO and OECD Economy Statistics GDP (PPP) $ 1.7 trillion (2005) GDP growth 1.6% (2005) GDP per capita $ 28,700 (2004) GDP by sector agriculture (2.7%), industry (24.4%), services (72.9%) (2004) Inflation (CPI) 1.8% Pop below poverty line 7% (2005) Labour force 27.72 million (2005 est.) Labour force by occupation services (71.5%), industry (24.4%), agriculture (4.1%) (1999) Unemployment 9.0% technically unemployed(July 2006) Main industries machinery, chemicals, automobiles, metallurgy, aircraft, electronics; textiles, food processing; tourism. Trading Partners Exports € 114.1 bn (March 2006) Export goods machinery and transportation equipment, aircraft, plastics, chemicals, pharmaceutical products, iron and steel, beverages Main partners Germany 14.7%, Spain 9.6%, Italy 8.7%, United Kingdom 8.3%, United States 7.2%, Belgium 7.1% (2005) Imports € 122.7 bn (March 2006) Imports goods machinery and equipment, vehicles, crude oil, aircraft, plastics, chemicals Main Partners Germany 18.9%, Belgium 10.7%, Italy 8.2%, Spain 7%, Netherlands 6.5%, United Kingdom 5.9%, United States 5.1% (2005) Public finances Public debt € 1.15 trillion (67.6% of GDP) Revenues $ 882.8bn (2004) Expenses $ 955.4bn (2004) Economic aid donor: ODA, $ 5.4bn (2002)

GDP PPP & GDP Growth Rates 2002 - 2006 est.:

Year GDP in billions of USD PPP % GDP Growth 2002 1603.740 1.3 2003 1641.774 0.9 2004 1724.647 2.1 2005 1811.561 1.5 2006 1889.783 2

Industrial production growth rate: 0.2% (2005)

Note:

• GDP = (Gross domestic product)
• PPP = (Purchasing Power Parity)

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