France's economic propects look 'favourable'

18th July 2006, Comments 0 comments

WASHINGTON, July 17, 2006 (AFP) - The IMF said Monday France's economic prospects are "favourable" and its economy should continue growing in the near term, but that government spending needs to be reined in.

WASHINGTON, July 17, 2006 (AFP) - The IMF said Monday France's economic prospects are "favourable" and its economy should continue growing in the near term, but that government spending needs to be reined in.

The International Monetary Fund report, which forms part of an annual review of the French economy, also warned against "economic patriotism" and protectionist tendencies, which it said run counter to France's best interests.

"France has changed more during the past several years than is commonly perceived," the IMF team which compiled the report said, adding "the economic outlook is favourable."

The Fund said it expected medium-term growth in France to average two percent a year, after years of below-par economic performance.

"Greater flexibility in labour and product markets has raised the economy's efficiency," it said.

The report noted that economic and social "reforms have been adopted successfully when they were well explained to the public and a consensus was built among stakeholders."

It cited pension and health care reforms and the bid to trim the country's public debt burden as "pertinent examples" of these efforts.

In April, the French government was forced to back down over reforms to youth labour legislation after weeks of mass protests and violence.

The IMF also noted that France's public deficit fell to under three percent of gross domestic product (GDP) in 2005 - finally coming into line with European Union rules.

The Fund said the 2006 aim of keeping the deficit at no more than 2.8 percent of GDP is "within reach."

Added to other measures, this should enable the French state to benefit from a drop in the public debt burden this year, "following a trend increase to 66.6 percent of GDP in 2005."

The IMF said the government's bid to lower its spending by one percent in real terms in 2007 "constitutes a welcome breakthrough."

However, it added that further reforms are needed to enable France to "significantly reduce" unemployment, address the country's aging population, and to adapt better to globalization.

Copyright AFP

Subject: French News

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