France yesterday delivered its strongest economic growth in almost six years, bolstering hopes for a revival in industrial investment and a sharp drop in the country's crippling unemployment problem in the coming months.
Strong consumer spending and buoyant industrial production helped France boost its gross domestic product by 1.1-1.2 per cent in the second quarter, according to advance figures from Insée, the national statistics office, against just 0.5 per cent in the first three months. The figure was significantly ahead of expectations for 0.8 per cent growth and was also accompanied by steady inflation at 1.9 per cent.
This is only the third time in 20 years the French economy has grown at such a rate and the news was hailed by economists as a milestone for the euro zone's second-largest economy.
"Until the end of 2005, we had the feeling that France was living independently of the world economy," said Philippe Waechter, chief economist at Natexis Asset Management. But the strong improvement in the second quarter, based partly on an acceleration in capital equipment exports, showed that France was "beginning to profit from strong global growth".
The news is also a boon for President Jacques Chirac, who is expected to step down after his term of office finishes next year. His government is deeply unpopular after a series of policy setbacks this year, although Mr Chirac has benefited recently from support for his firm stance on the crisis in Lebanon.
Yesterday Thierry Breton, finance minister, said the economy's performance demonstrated "that the strategy of growth led by the government, based on a return of confidence, control of public finances and increased investment, is bearing fruit".
France now appears to be on track to meet its target of 2-2.5 per cent GDP growth this year and is expected to rank near the top of euro zone growth for the second quarter.
Germany and Spain report growth rates on Monday, while yesterday Italy said GDP growth had slowed from 0.7 per cent in the first quarter to 0.5 per cent in the second three months.