PARIS – The French economy will grow more slowly than originally projected in the last quarter of the year due to the violent protests across the country, adding to pressure on President Emmanuel Macron to deliver a strong response in a highly anticipated address to the nation Monday evening.
Declining growth in key industries such as retail and transportation will complicate efforts by Macron to overhaul the economy, an effort under unprecedented strain from four consecutive weekends of protests that unleashed rioting in the French capital. Macron’s televised speech to respond to the movement – led by the gilets jaunes, or yellow vests – will be a pivotal moment for him to salvage his agenda.
On one hand, Macron needs to boost purchasing power for everyday French people to stem the protests. On the other, he has pledged to reduce costs for businesses to encourage them to hire more people and reduce unemployment. Slowing growth will make it difficult to do both while holding to the country’s deficit targets.
Gross domestic product will rise 0.2 percent in the fourth quarter of 2018 compared with the prior quarter, according to the bank of France’s monthly survey of business activity, conducted in November. In the prior survey, conducted in October, the bank had projected 0.4 percent growth in the fourth quarter compared with the third.
The economic slowdown is hitting restaurants and transportation, particularly automobiles, the bank of France said. A planned increase gasoline taxes were at the origin of the protests by the gilet jaunes. But rioting also led many stores and tourist attractions in central Paris to close on Saturday, at what is the height of the Christmas shopping season.
On Saturday, some 136,000 protesters took to the streets, authorities said. They included rioters who waged pitched battles with police in Paris and other major cities, smashing storefronts and leading to 135 injuries and more than 1,000 arrests.
On Monday, French Finance Minister Bruno Le Maire blamed the violence stemming from the protest movement would shave growth from the French economy. Shortly before the publication of the bank of France figures, Le Maire said on French radio that the impact of the protests would be a reduction in economic growth by about 0.1 points.
“That’s less prosperity for French people,” Le Maire said.