French economy growing faster than expected

The French economy put in a surprisingly strong performance in the first quarter of 2011 growing by one per cent. This is higher than the 0.6 per cent predicted by analysts. But its public deficit is larger than previously thought. 

REUTERS/Jonathan Ernst

The French statistics agency Insee, said that between January and March this year France’s economy expanded at its strongest rate since the second quarter of 2006, before the credit crunch triggered a recession around the world.

However the statistics body revised slightly its figure for France’s public deficit to 7.1 per cent of GDP at the end of 2010, not seven per cent as was previously reported. It also gave a new figure of 82.3 per cent for France’s total debt as a percentage of GDP which was 3.3 per cent higher than the earlier estimate.

France says it will cut its deficit to 5.7 per cent this year, and to three per cent the year after next to comply with the three per cent maximum set by the eurozone Stability and Growth Pact.

The news will come as a boost for President Sarkozy, who is lagging badly in the polls a year before the presidential election. His government has predicted economic growth of two per cent this year.

Christine Lagarde, the finance minister, said the government was “very confident that the forecast of two per cent growth for 2011 could be met.”

France outperformed the eurozone average first quarter growth figure of 0.8 per cent. Germany also exceeded expectations, growing by 1.5 per cent. However several economies posted sluggish growth rates. Italy grew by just 0,1 per cent, Spain by 0.6 per cent and Portugal slipped back into recession, contracting 0.7 per cent.

France also posted a stronger performance than Britain, whose economy grew 0.5 per cent from January to March 2011.