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France to keep up steady growth despite global slowdown - INSEE

France to keep up steady growth despite global slowdown - INSEE
FILE PHOTO: A French flag flutters in the sky over the Elysee Palace in Paris, France, December 10, 2018. REUTERS/Philippe Wojazer -
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Philippe Wojazer(Reuters)
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PARIS (Reuters) – Boosted by a firm job market and income gains, the French economy will maintain a steady cruising speed through the year even as the global economy hits a rough patch, the INSEE official statistics agency forecast on Thursday.

The stability of French growth this year, which INSEE sees at a quarterly rate of 0.3% throughout the year, contrasts with the slowdown taking hold of much of the euro zone, with Germany in particular on the brink of recession.

Despite the darkening horizon in France’s major trading partners, INSEE saw no reason to downgrade France’s growth, sticking with its forecast for 1.3% annual growth this year in its latest economic outlook.

That was marginally lower than the 1.4% forecast that the government has used to base its next budget on.

After adding 166,000 new jobs in the first half of the year, job growth would slow in the second half though the economy would still create another 98,000 jobs, INSEE estimated.

That would help drive the unemployment rate to 8.3% by the end of the year, the lowest since 7.8% was recorded in late 2008, just before the eruption of the global financial crisis.

Meanwhile, low inflation and tax cuts would continue to lift consumers’ extra income, pushing growth in purchasing power to 2.3% this year.

Although consumers would put away some of the income gains, pushing the savings rate to 15.1% this year, consumer spending – the traditional driver of French growth – was seen expanding at a healthy 1.1% this year.

(Reporting by Leigh Thomas; Editing by Lisa Shumaker)

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