The macroeconomic numbers in France are looking good. Can it last?
Last fall, the general idea was that the European economy and the French economy would go through a deep slowdown, linked to the Asia crisis. My thinking was that we’d soon be back on track–and that is what has been happening now for the last three months or so. We’re on track for 3% growth. Partially, it’s the euro. Two to three years ago, a lot of skeptics said we would respond to the slowdown as we did in the 1980’s, increase public expenditures while tightening monetary policy. We did the opposite: decreased the public deficit while having a rather lax monetary policy. Q: How worried are you by the strong dollar and the huge U.S. trade deficit? A: It’s true, Europe has a large trade surplus and the U.S. has a big deficit. In the long run we have to see a more balanced situation. But this is the price to be paid for the leadership of the U.S. economy in the world. So the U.S. trade deficit might be reduced, but not eliminated. That will only be the case if Europe becomes the domina
