French economy seen growing 0.2% in third quarter - Bank of France

Friday 08 August 2014 12.49
Bank of France gives its first estimate for third quarter growth
Bank of France gives its first estimate for third quarter growth

France's economy is seen eking out growth of 0.2% in the third quarter, the central bank said today.

But stronger than expected industrial output in June and upbeat consumer spending may support growth in the second quarter. 

The Bank of France, in its first estimate for third-quarter growth, forecast that the pace of expansion in Europe's second-largest economy would be unchanged from an estimated 0.2% in the three months from April to June. 

With official second-quarter growth data due to be unveiled next week, Prime Minister Manuel Valls has managed expectations by giving a bleak assessment of the economy in a pre-holiday speech. 

The French government is expected to revise down its 2014 growth forecast, currently at 1%, bringing it into line with estimates for 0.7% growth from the International Monetary Fund and the country's own statistics agency. 

However, despite stubbornly high unemployment above 10%, monthly data hinted that parts of the economy were improving, possibly supporting second-quarter growth. 

The INSEE statistics office said that industrial output had grown by 1.3% in June from May, beating expectations, while consumer spending in the same period had risen by 0.9%, also beating forecasts. 

But while such data could fuel economic expansion in the second quarter - which the central bank sees at 0.2% - economists say weak housing investment, lacklustre exports and high unemployment may erase any positive effect. 

The Bank of France also updated its monthly business climate report today, putting its measure of sentiment in the industrial sector at 96, down from 97 in June. 

Confidence in the service sector stood at 93, unchanged from June.

Keywords: economy, france