OECD Economic Surveys : France 1968.

46 Pages·2.546 MB·English

by  OECD

ORGANISATION FOR ECONOMIC CO-OPERATION ANO DEVELOPMENT
/
.URBANISATION DE COOPERATION ET DE DEVELOPPEMENT ECONOMIQUES
£
BASIC STATISTICS OF FRANCE
THE LAND
Area (1 000 sq. km) 551 Majorciliés (censusof 1962): Inh.
Arabic land (1 000 sq. km) 208 Paris 2S11 000
Marseille 784OfiO
Lyon 6.16000
THE PEOPLE
Population (1966-mid-ycar) 49400000 Civilian labour force 1966 (esti¬
Nd. of inhabitants per sq. km 90 mated) 19736(03
Nit increase in population (ave¬ Influx ol"manpower (1966, perma¬
nge 64-66) 517000 nent foreign workers)
Natural increase in population per
1 000inh.(annualaverage 1964-
1966)
PRODUCTION
Grossnational productat marketprices Origin ofthegross domestic product at
in 1966 (billions of francs) 500.5 market prices (1966):
GNP per head (US S) (1966) 2060 agriculture
Gross fixed investment (1966): manufacturing and mining indus¬
per cent of GNP 21.8 tries 36.5
per head (US S) 450 construction 9.0
other 47.1
THE GOVERNMENT
Publiccurrent expenditure in 1966('/,of Parliamentary representation the state of
GNP) 34.7 the Parties:
General Government current revenue in Naliona Assembly
1966 (% of GNP) 39.3 Full Associated
Gross fixed investment financed by the members inde
State in 1966 (% of GNP) 3.2 pendents
Democratic Union for
the Fifth Republic 179 22
Independent Republi¬
cans 41 3
Progress and Modern
Democracy 38 3
Federation of the De¬
mocratic and Socia¬
list Left 116 5
Prench Communist
Party 71 2
Others 7 .._
452
LIVING STANDARDS
Calories per head, per day (1964-65) 2900 No.ofTVsetsper 1 000inh.(end 1966) 153
Net consumptionofelectricity perhead Average hourly wage in metal indus¬
(1966) (kWh) 2035 tries in Paris region (1966), in F 4.32
No. ol" passenger cars per 1 000 inh.
(end 1966) 214
FOREIGN TRADE
Export*: Imports:
Expoits ofgoods and services including Imports ofgoods and services as a per¬
those to franc area as a percentage of centage of the GNP including franc
the GNP (1966) area (1966) 14.3
Main exports as a percentage of total Main imports as a percentage of total
exports (1966): imports (1966):
Food, beverage and tobacco 15.9 Food, beverage and tobacco 16.2
Machineryandelectricalequipment 15.9 Machineryandelectricalequipment 15.4
Transport equipment 8.6 Energy and lubricants 13.8
Iron and steel products 8.5 Chemical products 5.8
Chemical products 7.2 Iron and steel products 5.2
THE CURRENCY
Monetary unit: the Franc. Currency units per US S: 4.937
OECD ECONOMIC SURVEYS
FRANCE
ORGANISATION FOR ECONOMIC CO-OPBRATION AND DEVELOPMENT
The Organisationfor Economic Co-operation andDevel¬
opment was set up under a Convention signed in Paris on
14th December 1960 by the Member countries ofthe Organ¬
isationfor European Economic Co-operation and by Canada
and the United States. This Convention provides that the
OECD shallpromotepolicies designed:
to achieve the highest sustainable economic growth
and employment and a rising standard of living in
Member countries, while maintainingfinancial stabi¬
lity, and thus to contribute to the development ofthe
world economy;
to contribute to soundeconomic expansion in Member
as well as non-member countries in the process of
economic development;
to contribute to the expansion of world trade on a
multilateral, non-discriminatory basis in accordance
with internationalobligations.
The legalpersonality possessed by the Organisationfor
European Economic Co-operation continues in the OECD,
which came into being on 30th September 1961.
The members ofOECD are: Austria, Belgium, Canada,
Denmark, France, the Federal Republic ofGermany, Greece,
Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the
United Kingdom and the United States.
TheSocialistFederalRepublicofYugoslaviais associated
in certain work of the OECD,particularly that of the Eco¬
nomic and Development Review Committee.
This document was approved
by the Economic and Development Review Committee
in January 1968.
CONTENTS
Introduction 5
I Recent developments in the general economic situation 5
Main components ofdemand 33
Economic policy in 1967 44
H The outlook for 1968 25
Conclusions 28
Statistical Annex 31
TABLES
a) Text
1 Households' Account 11
2 Residential Construction 13
3 Non Financial Enterprises Account 15
4 Security Issues 16
5 National Accounts 18
6 Administrations' Account 18
7 Implementation of Budget and Treasury Operations 22
8 Banks' Consolidated Balance Sheet 23
9 Credit to the Economy 24
b) Statistical Annex
A National Accounts 33
B Economic Activity Indicators 34
C Prices and Wages 35
D Money and Credit 36
E Foreign Trade
(z) Total Trade 37
(//) Geographical Distribution 38
F Balance of Payments between Métropolitain France and
Countries outside the Franc Area
(i) Setdements 29
(i'O Transactions 40
LU
CD
<
û.
<
CQ
INTRODUCTION
Despite a budgetary policy designed to stimulate demand, the devel¬
opment ofthe French economy in 1967 has confirmed the fears expressed
in the last OECD survey. The expansion of overall demand has slowed
down considerably. In addition to the decline in residential building and
theslowingdown ofexports1whichconstitutedfactors ofweaknessin 1966,
consumer demand has shown signs offaltering in 1967. The effects ofthe
slowdown in final demand appear to have been accentuated by a tendency
to reduce stocks levels in trade. There wasvirtually no change in the level
of industrial production from mid-1966 to mid-1967, and there has been
an appreciable rise in unemployment since the Spring of 1967. However,
general business conditions have been improving since the summer.
In 1967 the authorities adopted an active budgetary policy which un¬
doubtedly did much to lessen the effects of the weakening of demand.
In 1968, however, the implementation ofa number ofstructural reforms is
likely to makethe overall effectofthepublicsector on demand arestrictive
one. For the rest, hope ofa substantial improvement in the situation in
1968 dependschiefly onautonomous or spontaneouschangesin demand by
consumers, and on France's export performance. This makes prospects
very uncertain.
PartI ofthis surveydescribesthedevelopmentoftheeconomyin 1967.
Theoutlookfor 1968isdiscussedinPartII. Theconclusions dealwiththe
problems confronting economicpolicy.
I RECENT DEVELOPMENTS
Theslowdowninthegrowthofproductionbeganasearlyasthesecond
halfof1966. Theseasonallyadjustedindexofindustrialproductionedged
up only marginally after July 1966. It fell by approximately 2 per cent
between December 1966 and May 1967 (the figures for April and May
were admittedly affected by strikes). Thisindexis knownto beunreliable.
In particular, it gives very incompletecoverageto theproduction ofinvest¬
mentgoods which, accordingto otherindications, seems to havecontinued
to increase until the summer of 1967. But there is practically no doubt
thattheriseinproductionwas verygreatlyreducedifnotcompletelyhalted
1 Thefactors in question were analysed in the OECD Survey for 1966-67, pp. 20
and 23.
OECD Economic Surveys
between the Summer of 1966 and the Summer of 1967. The decline in
textileproduction, whichhadcontinued withoutpause sincethe Summer of
1966, amounted to asmuch as 9 percent overthe twelve-month period and
the decline in private car production was almost 13 per cent. Output in
themetal and metal-workingindustries hasbeenpractically stationary since
the Summer of 1966. Only the construction industry has continued to
expand, though at a moderaterate (2 to 3 per centin annual terms). This
worsening in the industrial situation seems to have come to a halt from
June 1967 onwards. The latest INSEE surveys of employers' opinions
about their current production and short-term prospects indicate a gradual
improvement, and the September and October figures for industrial pro¬
duction show a substantial increase.
Thegeneraldeclinehasadepressiveeffect onemployment, allthemore
so as the labour-market showed little improvement during the 1965-66
recovery. After reaching a peak in 1964, employment overall declined
steadily until the end of 1965. After a slight recovery in the first half of
1966 it fell again from the autumn ofthat year onwards. Fluctuations in
employmentinthemanufacturingindustries,thoughsomewhatmoreaccen¬
tuated, followed the overall trend. The effects of the 1965-66 recovery
were confined to an increase in average hours worked, which nevertheless
remained shortofthepeakachieved in 1963-64and declined againfromthe
fourth quarter of 1966 onwards. Total activity (numbers employed mul¬
tiplied by hours worked) changed very little during the 1965-66 recovery.
Thissurprisingabsence ofanymultipliereffectdid muchto sapthestrength
of the recovery. It can probably be explained by the accumulation of
reservesofpotentialproductivityinenterprisessince 1963, whichthelimited
recovery of 1965-1966 had not been sufficient to absorb.
Howeverthatmaybe,thestabilityofthedemandforlabour, combined
withthenaturalincreasein thepopulation ofworkingage whichhas been
more rapid in the last few years prevented unemployment from declining
except for a short period from September 1965 to March 1966, after which
it began to rise again. The rate of increase was low until the Spring of
1967, but since then it has risen sharply. The number ofregistered unem¬
ployed (seasonally adjusted) increased from 168000 in March to 225000
in December 1967, which means, according to the method of calculation
customarily used by the French services, a total of some 400000 persons
in search of employment1. Vacancies rose moderately in 1966 but fell
again in 1967. However, since July 1967 vacancies have levelled off and
outstanding applications have risen at a slower rate.
1 TheFrenchauthoritiescalculatethenumberofpersonsinsearchofemployment
by multiplyingthe number ofregistered unemployed byacertain ratio. In view ofthe
entryintoforceon 1stOctober, 1967, ofnewregulationsforthereceiptofunemployment
benefits, it isveryprobablethat theproportionofregisteredunemployed hasincreased,
so that the ratio used to calculate the total unemployed will have to be changed.
France
Diagram 1 Short-termindicators
Indu:I960= IÛC
150 1 IV)
Industrialproduction*
140 J 140
130 . 130
120 L J 120
TL J 5*
Inouiono*
200 ,200
Unemployment*
150 J 150
100 . 100
50 j-«.
Vacancies*
OL JO
no Ind..: 1960=100 n0
Employment: allactivities*
105 105
100 L j 100
1lflj Million!ofdollars(3>inonHiimovingovtrago)
1100
Imports:total*
1000 1000
**> '(cid:9)> J(cid:9) 900
Exports:total*
«M *"' 900
700 t TOO
1964 1965 1966 1967
* Corrected for seasonal variations.
Source: OECD, MainEconomicIndicators.
OECD Economic Surveys
Main components ofdemand
The 1965recoverybeganwithasubstantialimprovementinthecurrent
external account during the first halfofthat year, the effects ofwhich were
reinforced by a recovery in consumer spending. In 1966, the expansion
was mainly sustained by a considerable increase in investment by enter¬
prises (in both fixed assets and stocks), whilst the other demand compo¬
nentswereslackeningappreciably. Foreigntradebecameanegativefactor,
because of a rapid increase in imports combined with a slight decline in
exports after the second quarter of the year. Residential construction
hardly increased at all. Private consumption showed signs of slackening
afterthe middle oftheyear. In 1967, the sluggishness ofprivate consump¬
tion became the decisive factor. Fixed investment, helped by a recovery
in residential construction, seems more or less to have maintained its 1966
pace, and the external account began to improve again, primarily as a
result ofthe decline in imports.
The slower rate ofgrowth ofprivate consumption during the last half
of1966seemsmainlytohaveaffectedpurchasesofthehigher-priced durable
goods. In 1967, however, it clearly became moregeneral. New carregis¬
trations, which had been growing more slowly from the middle of 1966
onwards, began to decline in absolute terms from May 1967 onwards, and
department stores' sales (seasonally adjusted) went up by only 1.4 per cent
in value in the first half of 1967 compared with the second half of 1966,
which must mean a complete standstill in terms ofvolume. The quarterly
indicators of households' consumption recently published by the INSEE1
showanabsolutedeclineinthevolumeofprivateconsumptioninthesecond
quarter of the year affecting all items including food. Certain partial
indications (in particular department stores' sales) suggest that the dete¬
rioration came to a halt in the course ofthe summer. The figures for the
final quartershouldconfirmtheimprovementin thesituation. But overall,
the increase in private consumption in 1967 compared with 1966 will not
be much more than 3 per cent in terms of volume. And even this will
for the most part have been a "profile effect " reflecting the fact that the
level of consumption at the end of 1966 was appreciably higher than the
average level for the whole year.
Themain cause oftheweakertrend in privateconsumptionis certainly
the employment and labour market trends described above. The current
statistics show that between the third quarter of 1966 and the third quarter
of 1967 there was a fall ofabout 2.5 per cent in total hours worked in all
activities, and of almost 3.5 per cent in manufacturing. These statistics
appear, however, to overestimate the decline in employment, owing to the
1 Études et Conjoncture, Supplément No. 8 (August 1957), page 74.