The global economic outlook promises challenging times ahead. Unlike diamonds, the Olympics are not forever!
The United States, France, and Germany are all facing economic difficulties. In Berlin, Chancellor Olaf Scholz is struggling to revive an economy that can no longer pull itself out of recession. Some are urging the Chancellor to allow the national debt to increase in order to jumpstart the economy. It’s true that, constitutionally, Germany is constrained by the "debt brake." This mechanism limits the annual structural deficit to 0.35% of GDP. Many economists blame this brake for stifling Germany's growth. More debt in a country that has imposed strict budgetary discipline on the rest of Europe for decades as an absolute necessity? A strange twist of history, indeed!
Germany, once the locomotive of the Eurozone in the 2010s, has now become the weak link of Europe.
Across the Atlantic, the economic situation is also tightening. The number of unemployed people rose to 7.2 million last month. A year earlier, only 5.9 million were seeking work. Is this a precursor to a potential recession in the USA? The American central bank is expected to lower interest rates again this September.
In France, GDP grew by 0.3% between April and June. France is expected to surpass 1% GDP growth in 2024. However, this isn’t enough to continue creating jobs. The economic outlook for the fall in France is complicated. Household consumption remains very weak, particularly in food, where there has been a 7% decline. Business investment shows slight growth, but the confidence of French business leaders is wavering, slipping into uncertainty and even doubt. After the euphoria of the Paris Olympics, where France is currently on "cloud nine," some are pleased with the positive contribution of foreign trade, but in reality, it’s the weakness of imports—French households are buying little—that largely explains the misleading improvement in France’s foreign trade.
Economically, the Olympic Games could be an economic lifeline for a France still mired in a deep political crisis. Economists cited by the newspaper *Le Monde* estimate that the Olympics will have a positive impact on the French economy, around 0.3%. Moreover, the economic impact of the Olympic Games has historically been linked to the number of medals won by the host country! France, currently among the top three most-medaled nations, should logically see a rebound in its growth. Medals, by nation, boost the economic growth of countries.
However, once the flame of the "hot-air balloon cauldron" is extinguished above Paris, the "country of Enlightenment" may face a darker future.