France's Insee sees 2007 GDP growth of 2.1 pct versus 2.2 pct in 2006

France's Insee sees 2007 GDP growth of 2.1 pct versus 2.2 pct in 2006

	Published : Thu, 21 Jun 2007 23:19 By : Agencies Print this Story

PARIS (Thomson Financial) - France's statistics office Insee forecasts 2.1 pct GDP growth for 2007, down slightly from the 2006 growth figure of 2.2 pct, although supported by continuing solid domestic demand.

The Insee GDP figure, given in its quarterly report on the French economy, is marginally lower than the OECD's estimate of 2.2 pct GDP growth for 2007 and government estimates of 2.25-2.5 pct, and compares unfavourably with the European Commission forecast of 2.4 pct growth.

Above all, France is expected to underperform the broader eurozone, where Insee sees GDP growth for 2007 of 2.8 pct.

Regarding the main components of GDP growth, Insee said domestic demand will remain robust over the year, with household consumption in particular benefiting from increased spending power due to a dynamic employment market, tax reductions and a decline in inflation.

Household purchasing power is set to rise 3.2 pct in 2007, versus 2.4 pct growth in 2006, while the number of job creations is forecast at 303,000 compared to 256,000 the previous year, Insee said.

Commenting on the figures Eric Dubois, head of Insee's economic department, said households should benefit from a reduction in their tax burden, citing in particular 'the 'prime pour l'emploi' (earned-income tax credit), the cap on overall individual taxation and the tax-exemption of overtime at the end of the year.'

With regard to the other components of growth, Insee sees corporate investment continuing to rise at a moderate pace in 2007, up 5.4 pct compared to 4.6 pct in 2006, while household savings should slow, rising 0.4 pct compared to +4.5 pct a year earlier.

Export growth should also slow, coming out at +3.1 pct for 2007, compared to 6.0 pct in 2006, notably under the impact of the strong euro, Insee said.

vicky.buffery@thomson.com

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