Central bank of France growth forecast

According to France’s central bank, the country’s economy is set to grow by 0.5% in the last three months of 2013.

Increasing levels of industrial production led to the Bank of France’s statement to increase the growth forecast from its previous forecast of 0.4%.

Currently, France’s official Insee statistics agency still predicts 0.4% growth for the same quarter, whilst the French Government had previously pegged economic growth for 2013 at 0.1% overall.

Industrial sector

The upgrade to the Bank of France’s estimate comes after its own business sentiment survey, which increased to a two-year high for the country.

Now France has shook off the recession (in early 2013) and increased output, businesses across the country are cautiously optimistic.

In particular, the country’s industrial sector index increased to 101 points.

This is the first time the sentiment rose to over 100 – its median score – since mid-2011.

Chief executives stated that an increase for cars, chemicals, food and pharmaceutical products was behind the rise.

The bank stated its belief that this demand would remain strong well into 2014.

Service sector

Services sector sentiment however dropped by a point to 92.

Respondents to the survey stated that staffing levels had rose in the sector, yet prices were expected to remain the same.

President Hollande’s Government, currently struggling with weak ratings at the polls, estimates the EUR 2 trillion economy should grow at least 0.1% next year.

This was before Standard & Poor’s (S&P’s), an international ratings agency, had cut France’s credit rating from an AA+ to AA in November.

S&P’s stated the Government’s current policy strategy would not be able to restore growth.

In addition, it voiced concerns over the country’s high unemployment rate, which in turn created difficultly for the government in terms of creating and implementing the reforms which would create growth.

At the time, French markets responded with calm, and the euro remained almost unchanged.

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