Standard & Poor’s is likely to raise its growth forecasts for France and the euro zone after Emmanuel Macron’s election as president and expected big victory in parliamentary polls, the rating agency’s chief European economist said on Monday.
PARIS Standard & Poor’s is likely to raise its growth forecasts for France and the euro zone after Emmanuel Macron’s election as president and expected big victory in parliamentary polls, the rating agency’s chief European economist said on Monday.
Jean-Michel Six cited expectations that Angela Merkel will secure a fourth term as German chancellor after federal elections in September as another factor reducing political uncertainty in the currency bloc.
“The two biggest countries in the euro zone will emerge from 2017 politically and economically stronger,” Six, who is Chief EMEA Economist at S&P Global Ratings, told the AJEF association of financial journalists.
“There has been a remarkable change in sentiment. Sentiment about what’s going on in France, and therefore in the euro zone, has changed in an incredible way in just a few weeks.”
Running as an independent centrist, Macron became France’s youngest ever president in May and his fledgling Republic on the Move party and its Modem ally won 32.32 percent of votes in the first round of the parliamentary election on Sunday.
Pollsters project they could win between 390 and 445 seats in the 577-seat lower house in the June 18 second round, a margin of victory that would ensure Macron can push through the pro-business reforms the former investment banker has promised.
These include an easing of stringent labor laws and reforms to an unwieldy pension system.
“We are reviewing our forecasts at the moment. We’ll likely raise our forecasts for France and countries in the euro zone,” Six said.
S&P’s current forecast of 1.5 percent growth for France in 2017 could be raised to between 1.7 and 1.8 percent, he added, although France’s continuing lack of competitiveness meant higher growth could lead to a higher trade deficit.
Six said political uncertainty and slow growth in Italy, the third-largest economy in the euro zone, remained a big risk for investors but that the success of Macron’s pro-Europe party in France could set an example for Italy and others.
“There could be another scenario which is a Macron contagion, because of the cultural similarities,” he said.
Six also expects Greece to reach a deal with creditors but doubted any delay could derail the outlook for the euro zone. “Greece is no longer a systemic risk,” he said.
(Reporting by Michel Rose- Editing by Catherine Evans)
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