French economic growth at two-year high | Business| Economy and finance news from a German perspective | DW | 13.05.2015
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French economic growth at two-year high

France has reported its fastest growth rate in two years as the country's economic output in the first three months of 2015 was fueled by higher consumer spending on the back of a weak euro and low oil prices.

Between January and March, economic output in France picked up by 0.6 percent compared with the same quarter a year ago - much faster than the 0.4 percent forecast by the country's statistics office, INSEE, last month.

According to preliminary quarterly figures released by INSEE on Wednesday, the main driver of Europe's second largest economy was domestic consumption which accelerated to 0.8 percent from a weak 0.1 percent in the final quarter of 2014.

French Finance Minister Michel Sapin described the figures as "very encouraging," adding: "Our growth prospects for 2015 are clearly comforting."

Investment worries

The figure for France's first-quarter gross domestic product (GDP) suggests that the country's economy might expand much faster over the whole year than the 1 percent currently forecast by the government in Paris.

What's worrying analysts, however, is the weak figure for capital investment which dropped by 0.2 percent in the quarter, following a 0.4-percent slump in the last quarter of 2014. In addition, exports slowed.

"We still do not estimate that the recovery will be strong enough to make a significant dent into France's high unemployment rate," IHS Global Insight economist Diego Iscaro told the news agency Reuters.

According to the experts, the French economy received a boost from cheaper energy and food prices, a weak euro and a European Central Bank (ECB) policy of printing money to stimulate eurozone economies.

uhe/ng (Reuters, AFP, dpa)

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