French growth a glint of light amid gloom

31st March 2005, Comments 0 comments

PARIS, March 31 (AFP) - The French economy grew by 2.4 percent last year, official data signalled with an upgrading on Thursday, a bright ray amid other gloomy statistics on unemployment and confidence.

PARIS, March 31 (AFP) - The French economy grew by 2.4 percent last year, official data signalled with an upgrading on Thursday, a bright ray amid other gloomy statistics on unemployment and confidence.

The statistics agency INSEE said in its latest estimate that the economy had grown by 0.9 percent in the fourth quarter and by 2.4 percent in the year instead of by 0.8 percent and 2.3 percent estimated a month ago.

The upgrading was unexpected since some analysts had even expected a downward revision to 0.7 percent and 2.1 percent.

These figures were therefore good news for the government which has forecast growth for this year of 2.5 percent. However, many experts regard this as unduly optimistic.

But the labour ministry reported meanwhile that the number of people unemployed, a highly sensitive political issue, had risen by 12,800 people or by 0.5 percent in February to a total of 2,481,100.

The jobless rate according to International Labour Organisation standards, was unchanged at 10.1 percent. The centre-right government has pinned much of its hopes for the economy on reducing unemployment this year.

Another set of data from INSEE showed that household confidence, which has been a key factor supporting the economy in the last three years, had slipped in March on a corrected basis.

Its confidence indicator had fallen by 25 points after a fall of 23 in February, and INSEE said that "all aspects of opinion (regarding confidence) were heading unfavourably in March".

The downward trend was particularly marked regarding how people saw their own personal financial situations. Expectations about unemployment worsened further in March. An increasing number of households was taking the view that they should be saving.

On the growth front, the governor of the Bank of France Christian Noyer said late on Wednesday that "France today is on a growth path closer to 2.0 percent than the 2.5 percent which the government hopes for".

INSEE said that in the last quarter of last year, spending by households had risen strongly, by 1.2 percent, after a decline of 0.1 percent in the third quarter, and had contributed 0.6 of a percentage point of growth.

Growth of exports had picked up in the fourth quarter, expanding by 1.3 percent after a rise of 0.6 percent in the third quarter, but growth of imports had slowed sharply, to 0.7 percent from 2.4 percent.

At CCF bank, analyst Nicolas Claquin commented that the latest figures showed broadly that the economy was on a slowing trend for the next few months.

And at Natexis Banques Populaires, analyst Marc Touati said that the upward revision of growth was not necessarily the good news it seemed to be because, once stocks were excluded, growth was 1.5 percent and also because the data showed that the growth was not having a commensurate effect on employment.

The problem in France, he argued, was not so much a weakness of consumption but rather a shortage of jobs.

Exane BNP Paribas analyst, Emmanuel Ferry, commented that the key problem behind the figures was low profitability by companies.

© AFP

Subject: French News

0 Comments To This Article