France to overcome recession

The French economy looked set to expand by 0.1 percent in the second quarter, the country's central bank said in a report on Monday.

The Banque de France admitted the prospects for growth and more employment remained rather dim this year, but pointed to a pick-up in April. The Q2 outlook from the central bank corresponded with that of the national statistics institute, INSEE, which had also penciled in marginal growth for the period in question after two quarters with a 0.2-percent contraction.

The Bank of France noted it based its growth estimate on confidence in industry and the services sector, with recent surveys showing that business leaders expected activity to firm by June at the latest.

Election promises

Official data showed that output by French industry rallied sharply in April by 2.2 percent from the March level. The rebound was largely due to a stronger automotive sector, and important industry in the country which had been hit by weak demand from the debt-stricken euro area.

ING Bank Global Economics analyst Julien Manceaux said the April figures were gratifying, but he warned that the prospects for business as a whole were still rather shaky. "Any durable rebound is unlikely before the second half of the year, let alone a reversal of the unemployment trend," he commented.

Growth and related tax income are of critical importance for the Socialist-led government of President Francois Hollande, supported by the Greens, which had set out to boost industry and create more jobs.

hg/msh (AFP, Reuters)