France's economic growth increased more than economists forecast in the fourth quarter as government incentives stoked car production and bolstered consumer spending.
Gross domestic product increased 0.6 per cent in the three months through December, from a revised 0.2 per cent expansion in the third quarter, Paris-based statistics institute Insee said today. Economists expected GDP to grow 0.5 per cent, the median of 10 forecasts in a Bloomberg News survey showed.
The expansion marks an acceleration of France's performance in the two previous quarters. The gain was propelled by a €1,000 government incentive to trade in old cars for new ones that expired in January, prompting consumers to bring forward purchases.
"The fourth quarter contains one exceptional element, which is the car scrapping program," said Dominique Barbet, an economist at BNP Paribas in Paris. "It's not only cars though, there's a real recovery, too."
The economy shrank 2.2 per cent for the full year, in line with the 2.25 per cent drop predicted by president Nicolas Sarkozy's government. Sarkozy is looking to revived growth to boost tax receipts, trim the budget deficit and stem a rise in unemployment.
The government forecasts growth of 1.4 percent for 2010, in line with a forecast by the OECD, finance minister Christine Lagarde reiterated in an interview today on RMC radio.
Insee revised the third-quarter number from an expansion of 0.3 per cent.
Bloomberg