France

Although ultimately a victor in both World Wars, France suffered extensive losses in its empire, wealth, and rank as a dominant nation-state. Nevertheless, France today is one of the most modern countries in the world and a leader among European nations. Since 1958, it has constructed a presidential democracy resistant to the instabilities it experienced in earlier parliamentary democracies. In recent years, its cooperation with Germany has proved central to the economic integration of Europe, including the introduction of a common exchange currency, the euro. At present, France is at the forefront of efforts to develop the EU's military capabilities to supplement progress toward a EU foreign policy. Voters elected Nicolas SARKOZY in the 2007 presidential election.

Statistics

GDP: purchasing power parity:

$1.816 trillion (2005 est.)

GDP - real growth rate:

1.4% (2005 est.)

GDP - per capita: purchasing power parity:

29,900 (2005 est.)

Inflation rate (consumer prices):

1.7% (2005 est.)

Labor force:

27.72 million (2005 est.)

Exports:

$443.4 billion f.o.b. (2005 est.)

Exports - partners:

Germany 14.7%, Spain 9.6%, Italy 8.7%, UK 8.3%, US 7.2%, Belgium 7.1% (2005)

Imports:

$473.3 billion f.o.b. (2005 est.)

Imports - partners:

Germany 18.9%, Belgium 10.7%, Italy 8.2%, Spain 7%, Netherlands 6.5%, UK 5.9%, US 5.1% (2005)

Population:

60,876,136 (July 2006 est.)

Population growth rate:

0.35% (2006 est.)

Population Below Poverty Line:

6.5% (2000)

Major Industries:

machinery, chemicals, automobiles, metallurgy, aircraft, electronics; textiles, food processing; tourism

Employing Workers: 134*

Registering Property: 160*

Enforcing Contracts: 19*

Closing a Business: 32*

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	France	Region
Procedures (number)	7
Time (days)	8

France Risk Assessment

Country Rating

Rating: A1

The political and economic situation is very good. A quality business environment has a positive influence on corporate payment behaviour. Corporate default probability is very low on average.

Risk Assessment

Economic growth was slightly slower in 2007 underpinned mainly by household consumption (57 per cent of GDP). Spending did not accelerate as expected, however, with households preferring to increase their savings substantially. The tax exemption granted for interest on property loans made it possible to postpone a soft landing for residential investment. Corporate productive investment remained at an acceptable level spurred by a lack of production capacity in many sectors. Foreign trade again made a slightly negative contribution to growth.

The growth trend should remain steady in 2008. Households should continue to spend at essentially the same rate registered last year with additional tax breaks partly offsetting rising prices for energy and food products. Stricter conditions for property loans will affect residential investment, which will continue to mark time and thereby contribute to the job creation slowdown. Public works, meanwhile, will remain buoyant thanks to orders from local communities spurred by municipal elections. Higher loan rates and difficulties in arranging financing should prompt companies to postpone somewhat their investment project. The continuing decline of their profitability — down from 8.5 per cent of GDP in 2000 to 5.2 per cent in 2007) and cash flow ratios — from 85 per cent in 2000 to 60 per cent in 2008) has made them particularly sensitive to the cost of the credit on which they have increasingly relied since 2004. The weaker domestic demand will slow the growth of imports. Less buoyant demand from European trading partners and the euro appreciation in dollar zones will keep exports from achieving enough growth to improve the current account balance.

Bankruptcies have begun to increase again (up nine per cent in the first half last year). That trend reflects the erosion of corporate margins, particularly those of smaller companies, unable to pass price increases for energy and certain raw materials on in their sales prices. The effects of that phenomenon have been exacerbated by excessively slow productivity growth coupled with the overly steep rise of labour costs. Rising agricultural raw material prices could undermine certain intensive grain-user food sectors like meat and dairy products. The situation has moreover remained shaky in subcontracting to the car industry and aeronautics, paper/cardboard processing, and textiles. The Coface payment incident index has nonetheless stabilised near the world average, and companies should generally remain profitable in 2008.

STRENGTHS

• Good demographics facilitate generational renewal and spur household spending.
• Diversification of energy supply sources has resulted in relative energy independence.
• France boasts a trove of internationalised and completive major groups in many fields including energy, pharmaceuticals, cosmetics, luxury, and distribution.
• A dynamic banking and financial sector has a strong presence abroad.
• A highly skilled labour force and high hourly productivity partly compensate for a short work year.
• Good quality infrastructure contributes to the country's attractiveness to tourists.

• The public finance deficit and debt are too high, particularly in view of the growth of health and pension spending.
• The concentration of decision-making authority in Paris and the multiple local administrative levels has not been conducive to reducing geographic inequality.
• Deficiencies in education and training have not facilitated access to the employment market for youth and the relatively unskilled.
• The investment effort on R&D remains inadequate.
• A somewhat unsuitable sectoral specialisation and the limited presence of French companies in high-growth emerging regions have affected foreign trade performance.

• Agriculture
• Apparel
• Arts & Crafts
• Automobile
• Bags, Cases & Boxes
• Chemicals
• Computer Hardware & Software
• Construction & Real Estate
• Consumer Electronics
• Electrical & Electronics
• Energy & Environment
• Food & Beverage
• Furniture & Furnishing
• Health & Medicine
• Home Supplies
• Industrial Supplies
• Lights & Lighting
• Machinery
• Mineral & Materials
• Office Supplies
• Security & Protection
• Service
• Sports & Entertainment
• Telecommunications
• Textile
• Toys
• Transportation