France expects higher growth

 
Chris Papadopoullos
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Higher growth would help President Francois Hollande to hit EU budget deficit targets
THE BANK of France expects the country’s economy to pick up this year, putting an end to three years of stagnation.

Meanwhile, unemployment fell for the first time since 2012.

The Eurozone’s second largest economy surprised most economists when it grew 0.6 per cent during the first three months of the year, faster than the UK and Germany.

The Bank of France now expects it to grow 1.2 per cent this year, rising to 1.8 per cent in 2016, boosted by cheap energy and a low euro exchange rate which helps exporters, it said yesterday. It marked the bank’s first publication of its medium-term growth and inflation forecasts.

The prediction is above the government’s, which could mean that President Francois Holland will find it easier to meet budget deficit reduction targets.

In a further sign of a turnaround in French economic fortunes, unemployment ticked down to 10.3 per cent in the first three months of the year from 10.4 per cent three months earlier, according figures released by Insee yesterday.

Economist Dominique Barbet from investment bank BNP Paribas played down the healthy jobs figures.

“We do not believe Insee data mean there is a profound improvement. The improvement is reflecting the rise in temporary jobs, underground economy and an increased number of discouraged workers who are not registered as unemployed people because of lack of proactive actions to find a job, which can be understandable considering that 66 per cent of job seekers have been looking for a work for more than one year,” he said.