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France reports growth in third quarter ... but not enough

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A Paris building site Getty Images/Roger Rozencwajg

France is on a "path of growth", President François Hollande said on Friday after economists annouced that third quarter growth was 0.2 percent. Although weaker than hoped, the trend was at least upwards after a 0.1 percent fall in the second quarter.


The government's economic policies have "made it possible to balance the country's books and find the path of growth again", Hollande declared at a ceremony to mark the 70th anniversary of the creation of France's Economic, Social and Environmental Council (CESE).

But Economy Minister Michel Sapin recognised that it would be "more difficult" to reach the government's target of 1.5 percent growth in 2016.

Economists say that growth of 1.2 percent in the last quarter would be needed to reach that target and believe it would be highly unlikely, especially bearing in mind weak gains in productivity and investment.

The preliminary estimate of a 0.2 percent rise in gross domestic product (GDP) was published by the official statistics institute Insee on Friday.

The 1.5 percent growth rate is judged necessary to make a permanent dent in unemployment, although Sapin stressed that joblessness has at last fallen, with its biggest drop since 1996 in August, and claimed that the economy has entered a "dynamic of recovery".

Services, construction, refineries bounce back

The third quarter's growth was strongest in services (0.6 percent), construction (1.0 percent) and refineries, which look particularly good at 13.7 percent until one recalls the 12.8 percent fall in the previous quarter.

It was driven by a 0.8 percent rise in overall demand and a 0.6 percent rise in exports.

But consumer spending continued to stagnate and imports rose 2.2 percent.

And, while investment in market services rose 1.1 percent, it fell 2.3 percent in manufactured goods and has risen less this year than in 2015, boding ill for growth in the last quarter.

Sapin blames strikes

Sapin blamed the low figure on the same temporary factors that affected the second quarter's figures, notably the strikes against the government's labour reform bill, which hit oil refinery output specially hard.

Last year's terror attacks continue to have an effect on the vital tourism sector, which has declined 7.0 percent this year, with particularly notable effects in the Paris region, and farming has been hit by poor harvests.

The Insee's experts do expect 130,000 jobs to be created in the private sector but, like the IMF and the OECD, they have revised their forecast for this year's growth downwards and do not expect the government's target to be reached.