French annual growth to drop to 0.8%
Friday, 20 June 2003The French economy is expected to grow by as little as 0.8% this year, the lowest recorded rate since the 1993 recession and significantly lower than the government's own estimate of 1.3%, the official statistics institute INSEE said.
INSEE warned that growth could slump even further still if the euro continues to rise against the dollar, damaging exports. The INSEE estimate fell slightly short of an earlier estimate reached by a panel of economists, which had forecast 0.9% growth for 2003.
After 0.3% growth in the first quarter, the French economy was near stagnant between March and June, with 0.1% growth, before crawling back up to 0.4%.
INSEE predicted consumer spending would be moderate in the second half of 2003, dragged down by a decrease in purchasing power, a sluggish labour market and rising unemployment (9.6% predicted by the end of 2003).
The economy would not benefit from the windfall from last year's tax cut package until the following year, nor would rising incomes have a significant effect on spending in 2003, INSEE said.
The French government had already halved its economic growth forecast from 2.5% to 1.3% in March and Prime Minister Jean-Pierre Raffarin warned in an interview published this week that growth in 2003 could be as low as 0.8%.
