The Bank of France slashed in half its assessment of the national growth in the final quarter, saying that chaotic French protests are to blame for hampering business activity.
The crucial impact of Yellow Vest protests was admitted in a survey published by the Bank of France on Monday. The growth forecasts were cut in half for the final three months of the year, down to 0.2 percent from 0.4 in the third quarter. That difference equals to $140 billion for the French economy based on the IMF forecast for the countrys GDP for 2018.
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“Services activity has slowed under the impact of the movement. Transport, the restaurant and auto repair sectors have gone backwards,” the French central bank said.
The gruesome prediction comes as France is in the midst of protests that started last month over the planned (now scrapped) increase of fuel prices and turned into major discontent with the current economic policies. On Monday, President Emmanuel Macron admitted that the country is in a state of “economic emergency.”
Meanwhile, Finance Minister Bruno Le Maire warned that the rallies had a “severe” impact on business and might cut fourth-quarter growth by 0.1 percent ($70 billion). The minister added that looting and damage caused by the protesters hit not only the entrepreneurs revenues, but also worsened Frances business image for foreign investors.
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The fourth consecutive weekend of massive rallies resulted in more than 200 people injured and a record number of detentions across France – more than 1,700 people. However, the raging protests have finally made the French government drop its fuel tax hike plan.
In apparent attempt to quell the growing social discontent, Macron also announced that minimum wage will be increased by €100 ($113) per month and pledged to introduce special tax exemptions for people earning less than €2,000 ($2,270) per month.
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