France is following trends of the IMF and other ratings agencies and cutting its growth targets for 2012. The nation’s prime minister has now lowered France’s 2012 growth forecast to 0.5% from 1% for the year, but interestingly enough has maintained that there is no need for a third round of austerity cuts.
Prime Minister Francois Fillon’s downgrade is an interesting one. This cut is not projecting a recession and it may skirt around ongoing election woes for President Nicolas Sarkozy in the upcoming elections.
By not predicting an economic contraction, in some cases the argument is that this entirely discount’s S&P’s Eurozone downgrades of late. If you were just watching headlines and nothing else, you would assume that France is going to have an economic contraction.
Tracking France via the iShares MSCI France Index Fund (NYSE: EWQ) might not look so rosy as though 0.5% growth is that realistic. The shares of this ETF are down 2% at $20.58 against a 52-week range of $17.88 to $29.16. A drop of only 2.7% in ADRs of Alcatel-Lucent S.A. (NYSE: ALU) may feel like a victory today.
JON C. OGG
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