French growth in 2017 headed for six-year high of 1.6 pct - INSEE


Reuters

PARIS, June 20 (Reuters) - France is on course for its
strongest growth since 2011 this year as foreign trade proves
less of a drag and the unemployment rate falls, the INSEE
statistics agency forecast on Tuesday.
    The French economy will grow 1.6 percent this year, up from
1.1 percent last year when foreign trade weighed heavily because
of the worst wheat harvest in decades and tourists stayed away
after militant attacks, INSEE said in its quarterly economic
outlook.
    The improvement gives President Emmanuel Macron an economic
tailwind his predecessor Francois Hollande never had, which will
help France's new leader push his reform agenda, starting with
an overhaul of the labour code. [nL8N1JF12J]
    The pickup will also reduce France's lag behind average euro
zone growth, which INSEE projected would reach 1.8 percent after
1.6 percent last year.
    INSEE forecast consumer spending would slow to 1.2 percent
this year from 2.1 percent last year as households' purchasing
power was eroded by higher inflation, which was seen averaging
1.1 percent over the year.
    Meanwhile, household investment was seen surging 3.7
percent, the fastest rate since 2006, boosted by real estate
purchases, which was in turn supporting the long-struggling
construction sector.
    On the employment front, the economy will create 222,000 new
jobs this year, down from 255,000 in 2016 because of the
expiration at the end of month of a temporary state handout for
small and mid-sized firms that hire workers.
    As more people got work, the jobless rate was seen falling
to 9.4 percent by year end, hitting the lowest level since late
2011.
    After a weak start to the year due to a slump in new Airbus
shipments, the foreign trade balance would improve with the
delivery of a giant new cruise ship and other big transport
contracts.
    As a result, foreign trade was seen subtracting only 0.3
percentage points from growth this year after 0.8 percent in
2016 when floods severely hurt the wheat harvest.
    On a quarterly basis, INSEE estimated the economy would grow
0.5 percent in both the second and third quarters and ease to
0.4 percent in the final quarter of the year.

 (Reporting by Leigh Thomas; editing by Richard Lough)
 ((leigh.thomas@thomsonreuters.com; +33 1 4949 5143;))

Keywords: FRANCE ECONOMY/



This article appears in: World Markets , Politics


More from Reuters

Subscribe






See Reuters News

Follow on:








Research Brokers before you trade

Want to trade FX?