PARIS, Dec 18 - France's national statistics office on Thursday painted a brightening picture for the country's economy, citing robust exports and an unexpected spurt in company investment. In its December quarterly report, INSEE backed a government pledge of an imminent recovery, hiking its growth forecast for the end of 2003 and predicting firm growth for the first half of 2004 -- a year after France was trailing near to recession. INSEE pegged first-quarter 2004 growth at 0.7 percent and second-quarter growth at 0.5 percent. Also raising its growth forecast for the fourth quarter of 2003 to 0.6 percent from 0.4 percent in October, INSEE said the rebound was driven by stronger exports in the last few months, steady consumer spending and a sudden rise in investment.
"These forecasts are characterised by a clear improvement in the international environment, particularly in the United States, and by a faster-than-expected rebound in investments," INSEE said in the report. "The performance of investment has been a good surprise. While our October report pushed back the recovery to the fourth quarter, in actual fact we saw a rise from the third quarter," it said. The euro zone's second-biggest economy has been hit hard by a global economic slowdown, and an unemployment rate of nearly 10 percent has fuelled worries over job prospects which knocked consumer confidence to an eight-month low in November. The steady surge in the euro has also damaged export competitiveness across the 12-nation single-currency zone. At the same time, recent industrial output figures in France point to a solid start to the fourth quarter, and INSEE said it expected company investment to keep growing after sliding by around 2 percent in 2003 following a weak start to the year. A year-end spurt should mean investments for the second half show a rise of 0.8 percent versus the first half, it said, a strong revision from the 0.1 percent rise forecast in the October report. Prime Minister Jean-Pierre Raffarin said recently the French economy could grow between 1.7 percent and 2.0 percent in 2004, above an official government forecast of 1.7 percent and well above 2003 growth which is expected to be less than 0.5 percent. INSEE is predicting growth of 0.2 percent for 2003 as a whole. It said the low point of the euro-zone-wide slowdown occurred during the first half of the year. "France will follow a course close to the euro zone average (in 2004) and will get back towards its long-term growth trend of 2.0-2.5 percent," the report said, without specifying the time frame for a return to healthier growth. The French government is counting on a return to decent growth in order to reduce its public deficit which is set to burst through European Union limits for the third year in a row in 2004, souring relations with the rest of the euro zone.//