PARIS: International investors are bullish, Wall Street bankers ecstatic, French business leaders full of confidence. And above all, Angela Merkel is happy. Less than a year after he took office, President Emmanuel Macron has ample reason to boast about France’s economic rebound. As happened across the eurozone, French GDP growth was much stronger than expected last year estimated at about 1.6 percent on an annual basis, a big jump from 2016’s 1.1 percent. And growth should be solid again in 2018. Macron’s determination to reform is being taken seriously in France and even in Germany, which has long been skeptical of French presidents’ reformist proclamations. Later this year, however, long-standing economic fragilities could reveal some chinks in the president’s armor. Government officials aren’t too worried for now and point out that all the components of growth give reason for optimism.France’s improving growth story so far is relative, and hardly Macron’s achievement. GDP rose last year much faster than expected everywhere in Europe, and France’s uptick was, in fact, below the eurozone average of 2.5 percent. The global recovery, which saw all the world’s major economies growing together for the first time in years, set the backdrop. And in Europe, it wouldn’t have been the same without the European Central Bank’s loose monetary policy, which kept interest rates at record lows and allowed eurozone banks to boost lending. That will be a litmus test because he is not at heart a free-marketer, small government politician,” noted one of Macron’s former teachers at ENA, the elite school for civil servants that he attended in the 1990s. The main problem is that, in a country where public spending amounts to 56 percent of GDP (a eurozone record), savings can’t be incremental. “You have to really go after the three big sacred cows of government spending: vocational training, housing benefits, and our so-called pro-job policies,” said one of Macron’s former advisers. So even in the absence of bad economic news, the last months of 2018 when the government publishes its 2019 budget will prove crucial for the French president: Macron will be tested in his bid to be taken seriously on the fiscal front though he may hope to benefit yet again from a fiscal windfall generated by stronger growth.
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