France clings to growth in trimmed third-quarter GDP
PARIS (Reuters) - France scaled back the extent of a surprise return to economic growth in the third quarter to 0.1 percent from a previous reading of 0.2 percent as the government struggles to revive exports and stem job losses.
The weakness of the euro zone's second biggest economy will add to the government's difficulties in meeting EU budget rules. Socialist President Francois Hollande is banking on 2013 growth of 0.8 percent to achieve a financial target that the International Monetary Fund says is over-optimistic.
Finance Minister Pierre Moscovici said that although he currently saw no reason to revise the target, the government would review it before it sends its long-term deficit reduction strategy to the European Commission in April.
"That's when we will see if this growth outlook is or is not credible or valid," Moscovici told Reuters during a visit to Paris' Orly airport.
The INSEE national statistics institute nudged down its estimate of 2012 gross domestic product growth to 0.1 percent from 0.2 percent when it released the final third quarter data.
Household spending and a rebound in exports helped the economy resume growth after a 0.1 percent dip in second-quarter GDP. Consumer spending rose 0.2 percent in November in inflation-adjusted terms, other INSEE data showed, beating expectations for zero growth and bouncing back from a 0.1 percent dip in October.
But a downward adjustment in the value of industrial stocks and a 0.6 percent slide in business investment, after a 0.5 percent rise in the second quarter, pulled down the third quarter and 2012 growth figures.
"We continue to forecast the full year (GDP) growth at 0.1 percent, although the risk is now greater to get a lower figure than a higher one," said BNP Paribas economist Dominique Barbet.
Hollande admitted last week that 2013 would be a "difficult year" with near-zero growth in the first six months and still-rising unemployment, but insisted he could cut the public deficit to below a European Union ceiling of 3 percent of GDP.
INSEE predicted in its quarterly economic outlook last week that the economy would grow just 0.1 percent in the first and second quarters of next year after likely growth of 0.1 percent this year, weaker than the government's 0.3 percent target and down from 1.7 percent growth in 2011.
It expects new orders from Germany and trade partners beyond the euro zone to spur a pick-up in exports.
But "uncertainty remains high, confidence is low," Barclays Capital economist Francois Cabau said.
France's 2 trillion euro ($2.6 trillion) economy had not grown since the third quarter of 2011. Hollande plans tax rebates from next year to reduce companies' labor costs, but critics say the measures do not go far enough.
Fitch ratings agency this month forecast France's 2013 growth at 0.3 percent, well below the 0.8 percent the budget is based on, as it affirmed the country's AAA rating, a badge both Standard & Poor's and Moody's removed from France this year.
The number of people out of work rose for the 19th consecutive month in November to reach a nearly 15-year high, labor ministry data showed on Thursday.
"For 2013, the question is whether the recovery seen in most confidence indices ... will help support economic recovery as early as the first quarter. We doubt so, because of the fiscal tightening in France and the ongoing economic weakness in neighboring countries," Barbet wrote in a research note.
($1 = 0.7564 euros)
(Additional reporting by Jean-Baptiste Vey and Leigh Thomas; Editing by Ruth Pitchford)