Growth and gloom ahead for French economy

16th December 2004, Comments 0 comments

PARIS, Dec 16 (AFP) - The French economy is expected to grow 2.1 percent this year, but will limp through the first half of 2005 at a 1.4 percent pace that threatens the official full-year target of 2.5 percent, the national statistics office INSEE said.

PARIS, Dec 16 (AFP) - The French economy is expected to grow 2.1 percent this year, but will limp through the first half of 2005 at a 1.4 percent pace that threatens the official full-year target of 2.5 percent, the national statistics office INSEE said.

In its December quarterly report, INSEE said that growth in gross domestic product was expected to have rebounded in the fourth quarter to 0.6 percent from 0.1 percent in the third quarter.

For next year, output was forecast to expand 0.5 percent in the first quarter and 0.4 percent in the second. INSEE does not forecast beyond a six-month horizon.

For the full year 2004, INSEE said the economy was expected to have grown2.1 percent, missing the 2.5 percent target set by the government.

To hit the 2005 target, after forecast growth of 1.4 percent in the first six months, the economy would have to steam ahead by about 1.5 percent in the third and fourth quarters.

That surge appeared unlikely given the context of a slowdown in the international economy, a tightening US monetary policy and the dampening effect of the euro's strength against the dollar on eurozone exports.

French Finance Minister Herve Gaymard, who was aware of the INSEE data in advance, appeared to hedge bets on the official GDP growth targets.

In a pre-release late Wednesday of an interview with the French business newspaper Les Echos to be published Thursday, Gaymard said that the French economy would grow close to the official target of 2.5 percent in 2004 and 2005 if pressure from high oil prices and a weak dollar eases.

GDP growth "undoubtedly will not be far from the target" of 2.5 percent in 2004, he said, and the rate would rise to "around 2.5 percent in 2005 if the tensions over oil and dollar ease."

© AFP

Subject: French News

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