France, Italy Output Jumped in January, Signaling Recovery Gain
March 10, 2010, 5:37 AM ESTBy Lorenzo Totaro and Mark Deen
March 10 (Bloomberg) -- French and Italian industrial production jumped in January, signaling the recovery is gaining pace in the euro-area’s second and third largest economies.
As both governments rein in the stimulus measures that helped their economies emerge from the worst recession in six decades last year, they are looking to foreign demand to drive growth and spur investment in 2010. Italian exports rose 0.1 percent in the fourth quarter, while French exports climbed 2.7 percent in January.
“Exports will be the key driver of growth with domestic demand remaining lackluster,” Joost Beaumont, an economist at Fortis Bank Nederland in Amsterdam, said about France. “The industrial sector is benefiting” from a pickup in world trade.
Manufacturing production in France, which excludes energy output, rose 0.8 percent in January, Insee said. Production of boats, planes and trains increased 14.5 percent, while output from auto and car-parts factories rose 3.1 percent. Output of rubber and plastics products gained 4.1 percent, while production at electronics factories jumped 4.9 percent.
Production Gains
In Italy, whose economy contracted 0.3 percent in the three months through December after emerging from the slump in the third quarter, output of transport vehicles and electronics rose 7.4 percent and 9.5 percent respectively, Istat said. The Bank of Italy forecasts a “weak recovery” of 0.7 percent this year.
“Strong data from output are likely to help growth during this quarter,” said Laura Cavallaro, an economist at Aletti Gestielle in Milan. “Still, we expect gross domestic product to expand at a moderate pace.”
Prime Minister Silvio Berlusconi’s government this year plans to spend at least 300 million euros ($407 million) on subsidies for the purchase of consumer goods such as home appliances, Deputy Industry Minister Adolfo Urso said on March 5. That compares with more than 1 billion euros spent last year on incentives, mainly for cars, that buoyed buying and benefited producers such as Fiat SpA.
France is looking to exports to boost the economy this year as stimulus spending is cut to 4.1 billion euros from 15.1 billion euros in 2010, Finance Minister Christine Lagarde said.
“If demand from abroad picks up, private-sector investment will replace government spending and we’ll get out of this situation,” she said on Feb. 28 on Europe1 radio.
--Editors: Jeffrey Donovan, Fergal O’Brien
To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net
To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net
