France has cut its growth forecast for next year to 2% from 2.5%, President Nicolas Sarkozy's office said today. The revised forecast came after a meeting between the president and senior economic officials.
The government said it expected France's gross domestic product to 'meet or exceed' this year's target of 1.4%, but that economic growth in 2011 would be slower than had been hoped.
Last week, figures showed that France's economy grew by a better than expected 0.6% in the second quarter, compared with 0.2% in the first three months of the year.
German growth to be slower in second half
Earlier, the German Finance Ministry said in its monthly report that its recovery was likely to continue in the second half of the year although at a slower pace as foreign demand slows.
Europe's largest economy last week posted growth of 2.2% in the second quarter - the fastest expansion since reunification - and beating expectations. The government will therefore have to change its official forecast for full year growth, which currently stands at 1.4%, the ministry said.
The Bundesbank said yesterday that Germany would see growth of some 3% in 2010, up from the 2% it forecast in June, bringing the central bank broadly into line with market expectations.
'Monthly economic indicators point to the German economy's positive start to the third quarter,' the ministry said, adding that the upswing was broadening, with private consumption and investments contributing to growth as well as exports.
'Yet economic momentum will likely be considerably less strong in the second half of the year than in the first,' it added.
The ministry said the continued recovery on the labour market would likely further boost private consumption. German unemployment fell in July to its lowest level since November 2008, declining for the 13th consecutive month.
However, the stimulus foreign demand provided to the German economy could well ease slightly in the second half of the year, the ministry said. The tax take from Germany's federal government and states looks likely to be better than expected.
The tax take fell 0.9% between January and July compared to the same time a year earlier. Tax experts had earlier predicted the tax take to fall 2.6% over the whole year. Revenue from the corporate tax paid by big companies rose 25.6% in the January to July period.
Germany emerged from its deepest post-war recession in the second quarter of last year, fuelled mainly by a powerful rally in manufacturing exports.
Meanwhile, Sweden's government dramatically hiked its economic growth forecast to 4.5% this year and 4% in 2011 from its previous estimates of 3.3% and 3.8%.
'The Swedish economy has shown an unexpectedly strong development during the first six months of the year, the finance ministry said in a statement.
