French economic growth to reach 2.5%: Sarkozy

25th August 2004, Comments 0 comments

PARIS, Aug 25 (AFP) - French economic growth should reach close to 2.5 percent in 2004, Finance Minister Nicolas Sarkozy was quoted as saying Wednesday by a government spokesman following a cabinet meeting.

PARIS, Aug 25 (AFP) - French economic growth should reach close to 2.5 percent in 2004, Finance Minister Nicolas Sarkozy was quoted as saying Wednesday by a government spokesman following a cabinet meeting.

"After 1.2 percent in 2002 and 0.5 percent in 2003, economic growth should reach about 2.5 percent in 2004," Sarkozy was quoted as saying by Jean-Francois Cope.

"The main uncertainties come from the international situation and the oil price," he said.

Last week, statistics office INSEE reported provisional second quarter gross domestic product growth of 0.8 percent, and said it would likely raise its current 2004 forecast of 2.3 percent.

The French government based its 2004 budget on a full year GDP growth forecast of 1.7 percent, but recent economic data led the statistics office to forecast 2.3 percent.

Sarkozy said Tuesday he estimated that stronger-than-expected growth this year would generate surplus tax receipts of about EUR 5 billion (USD 6.04 billion).

Cope quoted French President Jacques Chirac as telling ministers during the cabinet meeting that the economic recovery in France allowed "reasonable optimism" and showed that reforms under way should continue.

Chirac said the government must concentrate on two imperatives: controlling public expenditure and "doing nothing that might slow the three drivers of growth, which are consumer spending, investments and exports."

But while Sarkozy has called for extra revenues to be dedicated to cutting France's EUR 1 trillion (USD 1.21 trillion) debt, Prime Minister Jean-Pierre Raffarin has said he would favour a portion of the windfall being diverted to social and other spending.

France has committed itself to lowering its public deficit to below three percent of GDP in 2005 in order to meet euro zone rules stipulated in the Stability and Growth APct.

European Central Bank President Jean-Claude Trichet said earlier Wednesday that concerning surplus tax receipts, the ECB "can only recommend that these are set aside ... to cover fallow periods."

© AFP

Subject: French news

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