The French economy should expand by 2.1% this year, thanks to a rebound in the fourth quarter, and appears likely to resist a slowdown in global momentum expected in early 2007, the national statistics institute INSEE said today.
INSEE economist Eric Dubois said the stagnation in the French economy in the third quarter was a surprise and should be corrected by growth of 0.9% in the final three months of the year, powered by a pick-up in the manufacturing industry.
INSEE in early October predicted French growth in 2006 of 2.3% while Finance Minister Thierry Breton has spoken of an expansion of between 2-2.5%. In its twice-yearly forecast late last month the Organisation for Economic Cooperation and Development foresaw growth in France this year of 2.1%.
With a continuing slowdown in the US, global economic activity is likely to decelerate in the first three months of 2007, according to INSEE.
But Dubois said a resulting decline in French export earnings should be offset by robust domestic demand as housholds take advantage of lower income taxes next year and a weakening in crude oil prices.
The jobless rate is also expected to decline to 8.6% of the workforce by the end of 2006 and to 8.2% at the end of June next year.
