| BUSINESSWEEK ONLINE : DECEMBER 13, 1999 ISSUE | ||||||||
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| BUSINESS OUTLOOK
France: Getting a Jump on the New Year The French economy is surpassing expectations in the last half of 1999. And the strength is producing a wave of momentum as the euro zone's second-largest economy heads into 2000. France's real gross domestic product grew at a quarterly rate of 1% in the third quarter. Consumer spending, exports, and capital spending all posted robust increases. In particular, the weaker euro helped to boost exports, which jumped 4.4%, the biggest quarterly gain in a decade. More important, the early data show a vibrant economy in the fourth quarter. Consumer spending for goods in October jumped 2.3% from September, led by cars and home goods. Service demand is also rising, lifted by spending on mobile-phone and Internet connections. A low 0.8% inflation rate, falling unemployment, and cheap borrowing costs are prompting French households to spend. The outlook for the business sector is also upbeat. While the French statistical agency, INSEE, reported that business confidence dipped to 34% in November, that was from a five-year high of 38% set in October. So for the fourth quarter, business sentiment is running at a high level (chart). The INSEE survey also showed that in November manufacturers reported taking the most orders in 10 years. Part of those bookings probably came from businesses needing to restock merchandise. The surge in consumer and capital spending in the third quarter drew down inventories, a good sign for increased factory output in the months to come. The recovery in demand is also leading businesses to increase their capital budgets. Business investment will rise 6% this year and 3% in 2000. Thanks to the economy's third-quarter performance, the government has revised its forecast for 1999 GDP growth to 2.7%, up from 2.3%. Growth in 2000 is projected to be 3%. And the budget deficit will be 2.4 billion francs ($375 million) lower this year than first forecasted. Nevertheless, France's budget gap will be 2.2% of GDP, still the highest in the euro zone. By JAMES C. COOPER & KATHLEEN MADIGAN _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS France: Getting a Jump on the New Year CHART: Businesses Feel More Optimistic INTERACT E-Mail to Business Week Online | |||
