World-System (1980-2100) Will Political Instability Hurt the French Economy?

 

Yesterday, the NY Times reported (here) that "...after three government upheavals in France since last summer, the damage to the French economy has already been done." In this post, I will take a look at the data. The most recent data on French GDP comes from the World Bank and ends in 2024. The graphic above shows French Real GDP (GDP in constant 2015 US$) which a forecast and 98% confidence intervals out to 2100. 

French GDP is forecast to grow until about 2045 and then collapse after that. 

In terms of "damage to the French economy" to 2020 COVID-19 Pandemic was a major shock (outside the lower 98% confidence interval). In 2024, French GDP was a bit above the forecast attractor path (dashed red line). Political turmoil might reasonably be expected to bring the economy back to the attractor path but not create another COVID-style shock.

Possibly the most concerning aspect of the GDP forecast is the collapse starting around 2045. Why is the French Economy forecast to be in Growth-and-Collapse mode?

If you have been following my prior postings on the French Economy (here) you will see that France is approaching a Steady State Economy. French GDP, on the other hand, is best predicted by the World System (see the Notes below), which is in growth-and-collapse mode. To avoid this future, some geopolitical re-orientation will be needed.

Looking at the AIC statistics (below). One approach would be to reorient the French Economy to Business as Usual (BAU, [16.16 <  AIC =  21.38 < 25.79]) with no external geopolitical alignments, which produces the steady-state forecast above.  Compared to the World System model (W, [-97.78 < AIC =   -46.24 < -9.145]) which has the best AIC, this will require some geopolitical work. One path would be through the Random Walk (RW, [ -67.1 <   AIC =  -56.52 < -47.09]) which has a very good  AIC but is not predictive of the future.

One charitable analysis of current French Political Instability is that it is part of a Random Walk walk process to find a different Geopolitical Alignment. There is no guarantee that the process will end in a Steady State Economy.

You can experiment with the FRL20 BAU model here and explore alternative futures.

Notes

AIC Statistics