French growth accelerates, but deficit widens
France's growth accelerated to one percent in the first quarter of the year but its public deficit nevertheless widened slightly, the national statistics institute said on Friday.
According to the INSEE agency, between January and March the economy grew at the strongest rate since the second quarter of 2006, before the credit crunch triggered a global economic crisis, hitting one percent.
And the state body forecast that GDP growth for the year would be no less than 1.6 percent. President Nicolas Sarkozy's government budget is based on an assumption of two-percent growth over the period.
INSEE also warned that the deficit between government revenue and its spending on its budget, local government and social security, was slightly higher last year than had been previously estimated.
At the same time, INSEE revised annual economic growth in 2010 down from 1.5 percent to 1.4 percent owing to slower growth during the fourth quarter of last year, which was revised down from 0.4 percent to 0.3 percent.
France's public deficit stood at 7.1 percent of GDP at the end of 2010, up from the seven percent previously reported, and total public debt at 82.3 percent of GDP -- up 3.3 percent on the year at 1.5912 trillion euros.
These figures are headed in the wrong direction, as France has promised its EU partners it will cut its deficit to 5.7 percent this year then to three percent, the maximum permitted under the eurozone Stability Pact, by 2013.
But Finance Minister Christine Lagarde took comfort in the growth figure, which will also cheer Sarkozy one year before the country holds a presidential election, and said it showed France was on course to meet its modest expansion targets.
"Private investment is up, consumption is durable and we expect a job creation of more than 50,000 in the first quarter," Lagarde said, noting that manufacturing growth was "at its highest level in 30 years."
"Growth in the first quarter of 2011 came in at 1.0 percent, the strongest since the second quarter of 2006," she said, adding she was "very confident that the forecast of 2.0-percent growth for 2011 could be met."
Prime Minister Francois Fillon had said earlier that he expected growth for the first quarter of more than 0.8 percent, "double that in Britain and more than double the growth over the same period in the United States".
© 2011 AFP