France cuts long-term growth forecasts

France cuts long-term growth forecasts
Photo: AFP
More bad news for France on the economic front on Thursday as the French government cut its long-term growth forecasts. However the OECD did have some more positive news on the French economy.

France's economy will expand at a slower rate than earlier thought in 2016 and 2017, the finance ministry said in new forecasts published Wednesday.

Growth is expected to reach 1.5 percent for both years, rather than 1.7 percent previously forecast for 2016 and 1.9 percent for 2017.

The ministry however maintained its 2015 growth forecast at 1 percent.

It also reiterated that France is on course to bring down its public deficit to the EU limit of three percent of output by 2017.

The ministry's forecast came on the same day that the OECD think tank in Paris reported that growth momentum is strengthening in France.

"In Italy and France, the signs of a positive change in momentum, which were assessed as tentative in March, have now been confirmed," the OECD said in a statement.

The OECD's composite leading indicators (CLIs), designed to anticipate turning points in economic activity, also showed a positive change in momentum for Germany.

The figures will come as a relief to the European Central Bank, which recently launched a 1.1-trillion-euro ($1.2-trillion) bond buying programme to boost sluggish growth and ward off deflation.

Of particular concern have been France and Italy, the eurozone's second- and third-largest economies, which have been stagnating.

In Italy, which saw its economy contract 0.3 percent last year, the government is forecasting 0.7 percent growth this year.

France's government is forecasting 1.0 percent growth this year, after a meagre 0.4 percent expansion in 2014.

The Paris-based Organisation for Economic Cooperation and Development, which provides economic analysis and advice to its 34 industrialised country members, said the growth outlook was stable in the OECD area as a whole as well as for the United States, Britain and Japan.

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