While the Eurozone walks down the road to recovery, the French economy, the second largest in the European Union, along with related country-specific exchange traded fund, could get left behind.
Economists warn that France’s economy remains in stagnation and could threaten to weigh on the prospects for a wider Eurozone recovery, reports Liz Alderman for the New York Times. Many believe that France should actively push to improve growth alongside Germany, the largest economy in the euro union.
“The weakness of France is visible,” Bertrand Badré, managing director and chief financial officer of the World Bank Group, said in the article. “It’s not that France and Germany should dominate, but if we can’t find a way together, it might be an issue.”
Over the past month, the iShares MSCI France ETF (NYSEArca: EWQ) has dipped 0.2% while the iShares MSCI EMU ETF (NYSEArca: EZU) and the SPDR EURO STOXX 50 (NYSEArca: FEZ), which both focus on Eurozone countries, are up 1.2% and 1.6%, respectively. [European ETFs Strengthen But Watch Out For Trouble Spots]
After the Eurozone financial crisis and string of austerity measures to cut down on public debt, more officials are calling for increased spending to help kick-start a sluggish economy. Consulting firm PwC calculates that Europe will account for 10% of global infrastructure spending by 2025, down from 20% a few years.
“There are still post-crisis problems in the euro zone,” Jacques Mistral, head of economic studies at the French Institute of International Relations, said in the article. “There is a lot less spending today, so governments have to fill that hole.”
Mistral, along with other observers, are calling for increased public investments in energy, the environment, technology and high-speed internet.
Last week, the International Monetary Fund lowered France’s growth forecast to 0.7% from 1.0% this year and warned that the country could miss its targets to cut its budget deficit, AFP reports.