France's economic growth picks up
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Consumer spending is on the rise in France.
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PARIS, France (Reuters) -- French growth picked up in the final quarter of 2003, with a rise in imports and investment breathing life into the economy at the end of a weak year which saw growth at its lowest rate for a decade.
National statistics office INSEE said on Friday the French economy, the euro zone's second largest after Germany, grew 0.5 percent in the October-December period. This confirmed a "flash estimate'' released last week and met market expectations.
Over the full year, the economy grew a just 0.2 percent in 2003, the lowest since a contraction in 1993, INSEE confirmed. The fourth quarter growth rate was in line with the mid-range forecast given by economists polled by Reuters.
"This growth is due to the world rebound, which in turn is driving investment in France, and imports,'' said J.P. Morgan economist Maryse Pogodzinski.
"But the durability of this cycle also depends on French consumption, which unfortunately remains low.''
A breakdown of the fourth quarter gross domestic product (GDP) figures showed consumer spending rose just 0.3 percent after rising 0.5 percent in the third quarter.
Growth in France has been held back by persistently high unemployment, which rose to 9.7 percent in December. Worried about joblessness, consumers have held down their spending.
Emmanuel Ferry, economist at investment house Exane, said the fourth quarter growth was also boosted by public spending.
"If you strip out the contributions from the public sector, there is not a lot left,'' Ferry said. "The growth mix is not at all a sign of recovery.''
He said the government's official growth target of 1.7 percent for this year looked ambitious and he himself forecast 2004 growth of 0.9 percent.
The French news followed a report on Thursday showing the German economy expanded just 0.2 percent in the final quarter of last year as consumer spending remained sluggish and the strong euro held back exports.
Together, France and Germany account for around half the output of the 12-nation euro zone.
The French report showed investment rose 0.7 percent in the fourth quarter, with public investment up 1.4 percent and business investment up 0.6 percent.
Imports rose 2.1 percent. Ferry said this was a correction from the third quarter, when imports were flat after a 0.5 percent increase in the second quarter.
Finance Minister Francis Mer said on French television station LCI on Thursday that growth was taking hold in France and that there was a good chance it would reach the government's target of 1.7 percent this year.
In an interview with Ouest France newspaper released on Thursday, Prime Minister Jean-Pierre Raffarin was quoted as saying the jobless rate should start to decline in the second half of this year, and perhaps earlier.
"The consumer spending climate is good, investment is starting to pick up and I think we will be able to reverse the unemployment trend in the second half of 2004, and I hope even earlier,'' Raffarin told the regional daily.
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