December 16, 2019 / 1:13 PM / 2 months ago

French central bank trims outlook on global slowdown

PARIS (Reuters) - The French economy will grow slightly less quickly than expected next year in the face of a weak global economy struggling to contend with trade tensions, the central bank forecast on Monday.

FILE PHOTO: Facade of the Bank of France "Banque de France" headquarters in Paris, France, March 12, 2018. REUTERS/Charles Platiau

The euro zone’s second-biggest economy will slow next year to 1.1% from an estimated 1.3% this year, the Bank of France said in its quarterly economic outlook.

That marked a slight deterioration from September when the central bank had forecast the economy would grow 1.3% both this year and next.

Although the French economy has proven more resilient in the current slowdown than countries like export-dependent Germany and Italy, it too is feeling the pinch from a down-shift in global growth in the face of trade tensions.

“Things seem to be easing between China and the United States since Friday, but the phase one deal won’t settle all of the underlying issues and American trade policy remains too unpredictable” Bank of France Governor Francois Villeroy de Galhau said in an interview with Le Figaro newspaper.

China has agreed to buy $200 billion worth of additional U.S. goods and services over the next two years as part of a phase one trade pact to be signed in early January, the U.S. government said on Friday.

French Finance Minister Bruno Le Maire trimmed his growth forecast for this year to 1.3% from 1.4% previously due to trade tensions buffeting the global economy and he declined to give an estimate for next year.

Looking further out, the Bank of France forecast that the economy would pick up in 2021 and 2022 with growth of 1.3% both years as exports became less of a drag. In September, it had forecast 1.4% for 2021 and it did not have a forecast for 2022 then.

In the short term, the economy has had to contend with a nationwide strike since Dec. 5 over a major pension overaul with unions hoping to break President Emmanuel Macron’s resolve to reform.

Villeroy said that judging from past experience such standoffs tended to have little impact on growth and often simply pushed back economic activity until they are resolved.

Reporting by Leigh Thomas; Editing by Hugh Lawson

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