L'Europe se crée des besoins

In: Revue de l'OFCE, Band 31, Heft 1, S. 5-65

Abstract

Though Europe is indeed going through an activity slowdown, it could stand as the most dynamic area during the next two years. It will probably benefit from the opening of eastern Europe whereas the United States, still entangled in their twin deficits, are reaching the end of business cycle and Japan is facing financial disorders. Germany will act as locomotive for Europe. Both the fiscal reform and the reunification will push its internal demand up. It will therefore export less and import more. But on the other hand, its restrictive mone tary policy will impose itself upon other countries. There, as capacity utilisation rates are still high, exports will somewhat evict internal demand. Consequently, productions will slow down while current accounts will improve. Production and imports will become less dynamic in Asian developing countries, as they will be hampered by the american slowdown. But OPEC countries will increase their imports. All in all, world trade will decelerate but along geographical pattern that will benefit Europe in general and France in particular. France is still pursuing goals of balanced current account and a reduced budget deficit. Economic policy being moderately restrictive, household's consumption will decelerate. Faced with gradually weaker final demand and renewal of financial difficulties, firms will not increase their capital expenditures as fast as in 1989. The rate of growth of production will diminish in 1990 and pick up in 1991. As the labour market is relatively flexible, job creation will rapidly adapt to the fluctuations of production. Thus productivity will increase, but so will unemployment.