France's economy is likely to expand less rapidly than the euro zone average in 2015 due to weak construction investment, but recovery is under way and unemployment appears to be stabilising after a long rise, the statistics office INSEE says. Healthy exports and stronger household spending, coupled with less restrictive company investment policies, would generate 1.1 percent growth in gross domestic product (GDP), INSEE said in its quarterly outlook.
That was less than the 1.2 percent it was previously expecting but considerably better than the near-stagnation level of 0.2 percent in 2014. "As was the case last year, GDP is seen rising less strongly in France than the average of the euro zone," which on aggregate is expected to register growth of about 1.6 percent in 2015, INSEE said, adding that the lag was largely explained by anaemic real estate investment. Household spending is set to accelerate significantly in 2015, said INSEE. It predicted a rise of 1.7 percent, the strongest since 2007, after a 1.1 percent rise in 2014 and a drop of 0.1 percent in 2013.
After an unexpected second-quarter dip to zero growth in GDP and consumer expenditure, INSEE said it was expecting quarterly GDP rises of 0.2 and 0.4 percent respectively in the third and fourth quarters. Consumer spending would likely rise 0.4 percent in both of those quarters, for a total rise of 1.6 percent in 2015, more than twice last year's growth of 0.6 percent.
"France's unemployment rate (including overseas territories) stabilised at 10.3 percent in the second quarter. In the second half of the year the expected rise in employment should be enough to offset the rise in active population (new labour market entrants) and keep the jobless rate steady at 10.3 percent, versus 10.5 percent at end-2014," said INSEE. President Francois Hollande, elected in 2012 to serve five years, has said he will not consider running for a second term if he fails to reverse the trend of years of rising unemployment. The updated predictions from INSEE tallied largely with a government forecast of 1 percent GDP growth this year, though several political leaders have said in recent weeks that target could be beaten.