François Fillon

PARIS — Political uncertainty and a still-ailing tourist industry will challenge the French fashion industry in the year to come, but signs of a rebound in global luxury demand are fueling optimism for the famously resilient sector.

As France prepares to choose a new president in two rounds of voting in late April and early May, businesses and individuals would normally hold off on spending while they wait for the election’s outcome. Gildas Minvielle, director of the Economic Observatory at the Institut Français de la Mode, said that “2017 is an election year, and this is not typically good for consumption.”

But amid widespread dissatisfaction with the Socialist government headed by President François Hollande — whose approval ratings had plumbed record lows of four percent before he said in December that he would not seek reelection — the conventional wisdom may not apply.

“People are optimistic about what could happen when Hollande leaves,” said Renaud Dutreil, a former politician who has served as chairman of LVMH Moet Hennessy Louis Vuitton’s North American arm. “A new president bringing some hope and some fresh air could really push up consumption and investment.”

Status-quo candidates have quickly fallen out of favor in the current presidential campaign, with the leading candidates running on platforms that include substantial economic reforms.

The center-right candidate François Fillon — who is broadly favored to win — has been branded a “French Margaret Thatcher” for his promises to raise the age of retirement, reform social security, scrap the 35-hour work week and simplify the rules for firms to fire long-term staff.

Dutreil served as a minister alongside Fillon in the center-right government of Jacques Chirac, but has been a vocal supporter for an independent candidate for president, Hollande’s former economy minister Emmanuel Macron. The 39-year-old Macron, who stepped down from the Socialist government in August, has also proposed sweeping reforms to social security, retirement, and labor — but has placed an emphasis on liberalizing the economy while still maintaining social protections.

“A large majority of French people are against a Thatcherian revolution,” said Dutreil. “Macron thinks there can be mix of security and flexibility. He embodies two contradictory aspirations of the French people, the desire to move forward but to keep the best aspects of our system. People are not open to reforms that would make them regress to the Seventies.”

Macron has been polling mostly in third place — behind Fillon and the National Front’s Marine Le Pen — meaning he would not be expected to make it past the first round of voting. “Macron has the strongest trend,” however, according to Dutreil. “He is starting from scratch and is creating surprise. He has everything to gain.”

While the French fashion sector could benefit from the looser restrictions on labor as well as tax cuts proposed by either candidate, firms could face significant disruptions in the short-term as reforms are expected to produce vehement opposition from labor interests.

Strikes and protests — at times turning violent — already roiled French cities in spring 2016 as unions mobilized against a comparatively modest labor reform spearheaded by Macron under the Hollande government. A second round of reforms by Macron or Fillon’s more radical program could both lead to prolonged periods of social unrest.

“Our sector has a good social climate which has been able to manage reforms peacefully and respectfully,” said Frédéric Galinier, director of social and legal affairs at the French Federation of Couture, who doesn’t expect strikes to impact French luxury firms directly.

But strikes and protests could threaten the recovery of France’s tourism industry — a key contributor to luxury sales which have struggled to bounce back following terror attacks in Paris and Nice. For the year from November 2015 through October 2016, tour operators saw a 10 percent drop in the number of clients, according to the tour operators’ trade union Seto.

“We’ve had a big drop in affluent tourism, and these people aren’t coming back yet,” said Olivier Abtan, head of global luxury at Boston Consulting Group. “If there are strikes and the country is blocked for weeks or months this is a problem.”

For Abtan, political uncertainty is secondary to the structural challenges facing France’s export-focused fashion industry. Despite signs of a rebound in global demand — particularly in China and North America — “growth in the global luxury market will continue to slow down — and this is structural,” Abtan said.

The French luxury industry was built on the rising wealth of Baby Boomers in the Eighties and Nineties, and then on sales to emerging China — “and there isn’t another China — at least not yet. Much slower growth of 2 to 4 percent per year is here to stay,” he said.

A bright spot for French fashion in 2017 could be the “accessible luxury” sector, including brands like Sandro, Maje and Isabel Marant. “These brands have been developing in the white space left by luxury, which has pushed up prices a lot over time,” said Abtan. “They have taken the luxury approach to brand building and a fast-fashion approach to supply chain.”

While Abtan and his colleagues at Boston Consulting Group project top luxury growing at 2 to 4 percent in 2017, and mass market fashion at 2 percent, affordable luxuries could grow by 6 percent in the year to come.