22 March 2001, 12:55 PRESS: FRANCE TO REVISE 2001 GDP FORECAST TO +2.9%;2002 +3.0%
PARIS (MktNews) - French Finance Minister Laurent Fabius is set to
officially revise down the government's forecast range for GDP growth
this year to +2.7-3.1% from +3.0-3.6% after meeting with independent
forecasters on Wednesday, according to the business press Thursday.
The ministry's GDP forecast range for growth next year is 2.8% to
3.2%, economists who attended the traditional spring forecasting session
told the media.
The official revision confirms Fabius' hints in recent months that
"turbulence" from the U.S. economic slowdown will have only a moderate
impact on France's growth prospects, given strong domestic consumption
and investment.
The government intends to stick to its public deficit targets of
1.0% of GDP this year and 0.6% next year, in line with its central
fiscal Stability Program forecasts assuming growth of around 3%. This
year's government budget is based on last autumn's central growth
forecast of 3.3%.
Last year, the government was able to undershoot its public deficit
target of 1.4% of GDP by 0.1 point. But this advance has already been
used up by a shortfall of Ffr11 billion in complementary public pension
funds due to a conflict with the employers' group Medef over a reform of
the pension scheme, the daily La Tribune said.
In addition, security measures and public aid to cattle farmers hit
by the mad-cow crisis will bring an additional Ffr2.5 billion in
unplanned spending this year.
With its fiscal leeway reduced, the government remains under
pressure from civil service unions to boost the 0.7% standard pay rise
accorded for last year before beginning this year's negotiations. The
unions have called for a general strike and demonstrations today.
After the disappointing results of last weekend's local elections,
which saw the Center-Right opposition strengthen its hold in all but a
few large cities, many members of governing Leftist coalition are
pressing for higher social spending and wage hikes in order to win back
voters on the Left.
Fabius expects real per-capita revenues to rise by 1.2% this year
and 1.7% next year after barely +0.2% last year, assuming inflation of
1.5% this year and 1.2% next year, La Tribune said. This would mean an
acceleration in private sector salary gains after the nominal 2% rise
last year.
Employment is expected to rise by 2.8% this year and 2.0% next year
after +3.6% in 2000, enough to lower the jobless rate to 7.5% next year
from 9.0% in January, the daily Les Echos said.
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