French economy claws back

20th November 2003, Comments 0 comments

PARIS, Nov 20 (AFP) - The French economy grew 0.4 percent in the third quarter from the second quarter, French statistics agency INSEE said Thursday, confirming an initial estimate and raising another sign that France is on the road to recovery.

PARIS, Nov 20 (AFP) - The French economy grew 0.4 percent in the third quarter from the second quarter, French statistics agency INSEE said Thursday, confirming an initial estimate and raising another sign that France is on the road to recovery.

Last Thursday INSEE said it had estimated gross domestic product grew 0.3-0.4 percent in the third quarter, showing that France had escaped recession after GDP shrank by 0.3 percent in the second quarter.

Growth in the third quarter was driven by a recovery in domestic demand itself fuelled by household spending and business investment, INSEE said.

Household consumption grew by 0.4 percent in the third quarter from the previous quarter when it increased only 0.1 percent.

Meanwhile business investment grew 0.3 percent compared with 0.2 percent.Recovering foreign demand also benefited the French economy in the third quarter as exports grew 1.1 percent after a 0.8 percent fall the previous quarter.

The improving economic data have signalled the French economy is in the early stages of economic recovery, although concerns remain that the weakness of the dollar against the euro, which makes European exports less competitive on global markets, could hold back a tournaround in Europe.

French Finance Minister Francis Mer sought Thursday to dispell such concerns in a television interview saying the current weakness of the dollar would have less of a negative impact on economy than its relative value to the euro would suggest.

Speaking on television channel LCI he said the revaluation of the yen had offset much of the impact on exports caused by the weakening dollar.

He also said the government intended to push ahead with its controversial tax cutting policy, though it may not necessarily reduce income tax.

Tax cuts have been are one of the central planks in its policies for reinvigorating the French economy despite a huge public deficit that has reaised the ire of Brussels.

© AFP

Subject: French news




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