France sees strong growth, smaller deficit

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The Bank of France said Friday it expects the economy to have grown more slowly than expected in the first quarter but it would still put in a very strong performance at 0.7 percent.

The central bank, which had previously given a three months to March estimate of 0.8 percent, said the French economy was growing at its fastest pace since coming out recession.

Economy Minister Christine Lagarde said meanwhile that she maintained her 2011 growth forecast at 2.0 percent, "taking into account all the indicators on the manufacturing and service sectors."

Lagarde also cut her estimate for this year's budget deficit, a key measure of a country's financial health, to 5.7 percent of Gross Domestic Product from the previous 6.0 percent.

"We said we would come in at 6.0 percent for 2011 and I am going to tell my European partners ... that we have reset our target at 5.7 percent," she said late Thursday as she prepared to attend an EU finance ministers meeting in Hungary on Friday.

Lagarde said she would keep her 2012 deficit forecast of 4.6 percent for the moment, falling to the EU limit of 3.0 percent in 2013.

"We have committed to a target of 2.0 percent in 2014," she added.

According to figures from INSEE, the national statistics institute, the deficit last year was 7.0 percent, much less than the 7.7 percent government target.

INSEE said Thursday that it estimated first quarter growth at 0.6 percent, with the three months to June expected at 0.4 percent, putting France in the middle of a European league table led by powerhouse Germany.

© 2011 AFP

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