Finance minister shrugs off Q3's bad news

23rd November 2006, Comments 0 comments

PARIS, Nov 23, 2006 (AFP) - French Economy and Finance Minister Thierry Breton maintained his economic growth targets for the year on Thursday and forecast a fourth-quarter rebound after momentum slowed to zero in the third.

PARIS, Nov 23, 2006 (AFP) - French Economy and Finance Minister Thierry Breton maintained his economic growth targets for the year on Thursday and forecast a fourth-quarter rebound after momentum slowed to zero in the third.

"Little by little all the French and international research institutes have come round to my forecast of two to 2.5 percent (growth) in 2006 and the unpleasant surprise in the third quarter does not call the forecast into question," he told the Senate.

"After just three quarters we are already in the lower end of the planned range."

The national statistics institute INSEE reported Tuesday that guaranteed growth this year, a calculation that assumes no more increases or decreases through the end of the year, was already 1.9 percent.

Breton argued that "all the indicators point to a rebound in our economy in the fourth quarter, with a growth pace that we estimate to be between 0.6 and 0.8 percent".

The minister pointed to a 0.9-percent pickup up in consumer spending on manufactured goods in October, after a sharp fall in September, and a level of annual inflation limited to 1.1 percent in October.

Another cause for optimism, he told lawmakers, was an increasingly favorable international situation.

"The European economic climate is at its highest level in six years, the euro-dollar exchange rate is being maintained at 1.27 dollars — all these factors will support our exports in the fourth quarter."

Breton reiterated the government's determination to lower France's public debt to 64.6 percent of gross domestic product this year from 66.6 percent at the end of 2005.

He also recalled government commitments to reduce the public deficit, which covers national and local administrations as well as social welfare authorities, to 2.7 percent of output this year from 2.9 percent in 2005 and 2.5 percent in 2007.

He added that the reductions would be made possible thanks to "a stabilization in the volume of state spending for the fourth straight year."

As a member of the eurozone France is obliged to hold its annual public deficit to three percent or less of output.

Copyright AFP

Subject: French news

0 Comments To This Article