France's economy growing: minister

Written By Unknown on Rabu, 31 Oktober 2012 | 23.48

FINANCE Minister Pierre Moscovici has surprised markets by saying France's economy could post modest growth in the third quarter, a forecast considered optimistic by analysts.

"I am reasonably confident on French growth," Moscovici said on BFM TV and RMC radio.

"I think that we could have in the third quarter, I hope, slightly positive growth."

The INSEE national statistics institute forecasts that the French economy will show no growth in period from July through September.

The French economy has not posted any quarter-on-quarter growth for the past three quarters.

But INSEE still forecasts that French growth domestic product (GDP) will rise by 0.2 per cent this year.

Moscovici's optimism could be based on consumer spending, the biggest driver of the French economy, growing by 0.1 per cent in September and by 0.2 per cent in the third quarter, according to data released by INSEE on Wednesday.

Analysts are sceptical, however, noting that consumer and business confidence are at their lowest levels since the depths of the global economic crisis in 2009.

The new Socialist government of President Francois Hollande is constrained by France's EU obligations to cut the public deficit to 3.0 per cent of GDP from 4.5 per cent this year.

The government plans to make 37 billion euros ($A46.6 billion) in spending cuts and tax hikes to meet the target, although this will likely slow growth and increase unemployment.


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