French finance minister maintains growth forecasts

17th May 2010, Comments 0 comments

France's Finance Minister Christine Lagarde maintained the government's forecast of 1.4 percent growth for 2010, in an interview to appear in Monday's edition of the France-Soir newspaper.

And growth of 2.5 percent was an "ambitious" but "plausible" forecast for 2011 and 2012, she told the French daily.

Despite last week's news that the first-quarter rise in gross domestic product was only 0.1 percent, the government was still aiming for 1.4 percent growth this year, said Lagarde.

"We made made an average of 0.4 percent over the last two quarters," she said. "We have to get 0.4 percent over the next two quarters and we will be on target."

The government was looking at growth of 2.5 percent in 2011 and 2012, she added, which she admitted was ambitious.

But when the economy suffered sudden sharp drops, it was often followed by equally sharp rises, she argued.

Therefore, she said, "even if ambitious, our objective for 2011 is quite plausible."

She nevertheless conceded that forecasts had become a very difficult exercise since the financial crisis.

Figures released last Wednesday by the state statistics agency INSEE showed that France's economy shrank by even more than initially feared during last year's historic recession.

Revised figures showed that the worst slowdown since World War II had knocked 2.5 percent off France's gross domestic product in 2009, more than the 2.2 percent initially estimated.

The figures, showing only 0.1 percent in the first quarter to March this year, have led some observers to question the government's already modest recovery target of 1.4 percent growth over the year.

INSEE said growth was held back by low consumer confidence, which depressed the domestic household spending that is traditionally a motor of the French economy.

© 2010 AFP

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