The French National Statistical Institute (INSEE) business confidence index for the entire economy is expected to improve from 96 to 97 in May, while the manufacturing index should remain unchanged at 101. The INSEE business survey is a reliable tool that uses a sample comprising 20,000 companies.
Historically, a reading of 97 for the general economy is consistent with a GDP growth rate of 0.4% qoq. Societe Generale forecasts growth for Q2 15 of 0.4%, and thus expects the index to stabilise over the coming months.
Looking ahead, low oil prices and a weak euro should continue to play out, while corporate tax cuts this year should also start to filter through to the economy and positively impact business confidence.
However, French business leaders still need to be convinced that these positives can materialise into sustainable and structural growth, which is likely to cap the improvement in business confidence, according to Societe Generale.
