French economy 'on course' for 2.5 pct growth

22nd July 2004, Comments 0 comments

PARIS, July 22 (AFP) - The French economy is heading for growth of 2.4 - 2.5 percent this year, junior Budget Minister Dominique Bussereau said on Thursday, repeating a sharply brighter outlook than the official forecast of 1.7-percent growth.

PARIS, July 22 (AFP) - The French economy is heading for growth of 2.4 - 2.5 percent this year, junior Budget Minister Dominique Bussereau said on Thursday, repeating a sharply brighter outlook than the official forecast of 1.7-percent growth.  

His comments, along with data showing strong household consumption of manufactured goods, are a signal the government might receive much-hoped-for relief in the form of tax receipts and possibly an easing of unemployment charges to help it reduce heavy overspending.  

Busseareau told France Info radio and LCP television: "The current budget is based on growth of 1.7 percent. We are seeing at this stage of the year that we are more on course for growth of 2.4 or 2.5 percent."  

He said growth next year might be 2.0-2.5 percent, describing this as reasonable in a context of world growth of 4.0 percent and eurozone growth of 2.5 percent.  

"But that depends on some things which we do not control, particularly the future of the American economy which could change after the (presidential) elections.  

The French finance ministry, in preparing its budget for 2005 would work on the basis of growth next year of "about 2.0 percent, certainly slightly more" but the ministry was still being cautious.  

He said the ministry was working on a basis that inflation next year would 1.5-1.8 percent.  

France is under strong pressure from the European Commission to reduce public deficits that are far in breach of eurozone rules. The government is also counting on an upturn to ease its difficulties in introducing reforms to the welfare system.  

At the beginning of July Economy and Finance Minister Nicolas Sarkozy suggested that the economy was heading for growth of 2.3-2.4 percent this year.  

On July 14 President Jacques Chirac, in his traditional interview marking Bastille Day, said that growth was making a comeback in France and that the recovery, while weaker than in some countries in the world was stronger than the average in Europe.  

On July 15 the French central bank said that the economy was likely to show growth of 0.6 percent in the second quarter and again in the third quarter, meaning that if there were no growth in the fourth quarter, the economy would have expand by 2.3 percent in the year.  

The official statistics institute INSEE expects the economy to grow by 2.3 percent this year and the International Monetary Fund has put growth at 2.4 percent.  

Meanwhile INSEE said that household spending on manufactured goods had risen sharply in June from the May figure, by 4.2 percent, to show an increase of 8.5 percent over 12 months on an adjusted basis.

© AFP

 

Subject: French news

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