Growth figures encouraging for French economy

3rd January 2006, Comments 0 comments

PARIS, Jan 3 (AFP) - The French economy grew 0.7 percent in the 2005 third quarter from the previous quarter, final official data showed Tuesday, putting France on track to achieve 1.5 percent growth for the full year.

PARIS, Jan 3 (AFP) - The French economy grew 0.7 percent in the 2005 third quarter from the previous quarter, final official data showed Tuesday, putting France on track to achieve 1.5 percent growth for the full year.

The national statistics institute INSEE, publishing final figures for its November 18 estimates, confirmed its previous estimate of 0.7 percent expansion in the third quarter from the second.

It also revised slightly higher, by 0.1 point, the full-year growth forecast to 1.5 percent. The tenth-point difference resulted from a revision of early 2004 data.

Gross domestic product growth in 2005 was poised to reach at least 1.5 percent, unless GDP contracts in the fourth quarter, a development considered unlikely.

Consumer spending and business investment, the two traditional motors of French economic growth, recovered in the third quarter from declines in the previous quarter.

Household consumer spending rose 0.7 percent, after falling 0.1 percent in the April-June period. The rise added 0.4 points to GDP growth.

Investment in non-financial business advanced 1.8 percent, compared with a decline of 0.8 percent in the second quarter.

Total business investment, up 1.3 percent after a decline of 0.1 percent in the previous quarter, contributed 0.3 points to GDP growth.

Xerfi analyst Nicolas Bouzou, who expects 1.6 percent GDP growth in 2005, said there was "a notable and reassuring improvement in purchasing power" -- up 0.6 percent, twice as much as in the first two quarters, which had underpinned consumer spending.

HSBC economist Nicolas Claquin predicted the gain in purchasing power would "reach at least 1.8 percent over the course of 2005."

That momentum would accelerate in 2006, he forecast, and could "exceed 2.0 percent this year for the first time since 2002 and thus would further bolster household spending."

Copyright AFP

Subject: French news

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