French economy escapes recession
PARIS, Nov 13 (AFP) - French gross domestic product grew between 0.3 and 0.4 percent in the third quarter from the previous quarter as the economy escaped a recession, an estimate published Thursday by the French statistics institute INSEE showed. The figures compared with a 0.3-percent dip in GDP in the second quarter. A recession is defined by at least two consecutive quarters of shrinking GDP.
PARIS, Nov 13 (AFP) - French gross domestic product grew between 0.3 and 0.4 percent in the third quarter from the previous quarter as the economy escaped a recession, an estimate published Thursday by the French statistics institute INSEE showed.
The figures compared with a 0.3-percent dip in GDP in the second quarter. A recession is defined by at least two consecutive quarters of shrinking GDP.
INSEE calculated that if the economy managed to show quarterly growth of 0.4 percent in the fourth quarter, the French economy would be on the road to growth of 0.2 percent for the year.
That would be lower than French government's assumption that the economy will grow 0.5 percent this year but is in line wiith the Bank of France's prediction for 0.2 percent growth.
In the first half of the year growth was 0.1 percent.
INSEE said the figures released Thursday were just a first estimate and that another reading would be published in one week followed by detailed results 40 days later.
Although the figures were subject to being revised, analysts welcomed the data as a sign the French economy was on its weigh to recovery. "It's official, France isn't in recession," UBS analyst Stephane Deo sighed.
He explained that the in the context of the fourth-quarter figures, the second-quarter dip looked less like a trend and more like the result of exceptional factors such as a series of strikes over pension reform.
Goldman Sachs analyst Nicolas Sobczak said the third-quarter data were better than analysts' expectations and bode well for the French economy in the coming quarters.
"The French growth figures in the third quarter are a bit better than consensus forecasts and should put an end to fears that France could be passed by the recovery.
"We are expecting an acceleration in the fourth quarter and the first quarter of 2004 as the investment cycle should logically pick up quickly thanks to low interest rates," he said.
The improvement in the third quarter comes after some recent surveys and data suggested French consumers are in a foul mood or had reason to be in a foul mood.
An INSEE consumer confidence survey released last week declined in October, showing French consumers were pessimistic about their living standards.
The Labour Ministry said at the end of October that the unemployment rate also edged slightly higher in August to 9.7 percent, which usually weighs on consumer confidence.
However, although consumer confidence remains weak, signs are growing that business activity is beginning to pick up.
Industrial production figures published Wednesday showed a 0.9 percent increase in manufacturing output although overall industrial output increased only 0.4 percent.
Production of intermediate goods, which are used to make other goods, was particularly strong as is often the case at the beginning of a recovery when businesses increase output in the face of improving demand.
Subject: French news