Despite marginally raising its growth estimates, the International Monetary Fund stated that Frances economy is not recovering rapidly enough to cut unemployment and debt significantly, and without further reforms, will not do such.
The IMFs cautionary was announced as President Francois Hollandes government confronted a protest with unions carrying out refinery, port and rail strikes over a disputed labor reform to make hiring and firing much easier.
According to the IMF during the preliminary findings of a yearly review of the country, France’s economy is set to rise nearly to 1.5% this 2016 and in the next five years, 1.75% on average.
The institution had previously predicted 1.1% growth this year and 1.3% in 2017.
The more positive viewpoint lends some authority to the governments own estimates for a 1.5% growth this year and next. Several economists say this is the bare minimum required to make the unemployment rate decline.
Less than a year away from the presidential election, the Socialist government is banking on its reform of Frances highly codified labor market to being down joblessness, settled at around 10% at present. However, according to the IMF, job creation will still be delayed unless the government creates greater and more reforms for the labor market than the present.
IMF advised tightening rules for receiving unemployment benefits, which would likely be a problem for unions.
Elsewhere in government finances, the IMF claimed that progress came from recovering growth and declining interest rates rather than reduced spending.
Although without significant effort than the present, the IMF added that the country’s reduction in public deficit will be just hardly in line with its 3% economic output goal in 2017. Its approximate debt would hit 98% of gross domestic product next year.
It suggested as well restructuring Frances massive civil service and keeping wage growth in check after the government approved a two-step salary hike earlier this 2016, following a six-year freeze.
Meanwhile, IMF also stated that social spending would be a suitable source of savings, especially if the benefits were progressively handed out based on necessities. More savings could be initiated by raising the age of retirement, and keeping health spending in control.
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