French growth picks up in 4th quarter

PARIS: France enjoyed modestly accelerating growth in the fourth quarter, data showed yesterday, but the eurozone’s second-biggest economy still failed to match the government’s target for the full year 2016. Gross domestic product rose by 0.4 percent in the final three months of the year, lifted by rising corporate investment and consumer spending, after 0.2 percent in the third quarter and a contraction of 0.1 in the second, the Insee statistics bureau said.

This took French growth for 2016 as a whole to 1.1 percent, short of the 1.4 percent President Francois Hollande’s government had been forecasting. “For the second year running, economic activity was dynamic and allowed a reduction in unemployment and a cut in the public deficit,” Finance Minister Michel Sapin said in a statement. French jobless numbers, while still around 3.5 million, declined for the first time since 2007 last year. Fourth-quarter growth figures showed “a recovery that is sustainable, and most of all, widening”, Sapin said, predicting a “very dynamic start to 2017”.

Insee said France was on track for 0.4 percent growth in both the first and second quarters of this year, and unemployment was set to edge lower. The French government is forecasting 1.5 percent growth for 2017, partly thanks to tax breaks for corporate investment, but economists are doubtful. “The various government measures have been positive for investor morale, but in macro-economic terms their impact is very weak,” said Christopher Dembik, head of economic research at Saxo Banque.

A stronger euro, higher oil prices and likely interest rate rises will combine to make growth “weaker than the government is expecting, perhaps even weaker than in previous years”, he said. — AFP