France on track for 0.2% growth this year

4th October 2013, Comments 0 comments

France is on track to achieve a modest 0.2 percent growth this year, official data showed Thursday, with stubborn unemployment and a lack of investment hampering a full rebound of Europe's second-largest economy.

Following surprise economic growth of 0.5 percent in the second quarter, which allowed France to exit from a short recession, the country's Gross Domestic Product is expected to stagnate in the third quarter before reaching 0.4 growth in the final quarter, said national statistics agency INSEE.

Overall, the French economy is set to grow by 0.2 percent in 2013, slightly beating government forecasts of 0.1 percent.

INSEE said France's GDP would return to levels last seen in early 2008, before the global financial crisis struck.

"If the trend forecast by INSEE is confirmed in the coming quarters, our growth forecast of 0.9 percent for 2014 may be exceeded," Finance Minister Pierre Moscovici said in a statement.

INSEE said it expected unemployment, which has been on the rise for two years, to increase by 0.1 percent to 10.6 percent in the third quarter, and remain at that level for the final three months of the year.

The agency said manufacturing output was set to fall by 0.4 percent in the third quarter before bouncing back in the fourth quarter.

After two years of decline, it also said it expected investment, which economists say is a key sign of the recovery's strength, to grow by 0.3 percent in the fourth quarter.

Household purchasing power was expected to decrease slightly in the final two quarters of 2013 because of taxes and inflationary pressure, INSEE said.

Nevertheless, consumer spending, seen as an important driver of the economic recovery, is forecast to grow by 0.1 percent in the third quarter and 0.3 percent in the fourth.

© 2013 AFP

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