The increase, by two tenths of a percentage point, brings Insee's forecast into line with the latest predictions made by ministers.
Insee now expects the French economy to expand by 0.5 percent quarter-on-quarter in both the third and fourth quarters.
With the French economy having expanded at around a tepid 1.0 percent rate in recent years, an acceleration to 1.8 percent growth would represent a considerable improvement.
Business surveys have shown a new sense of optimism in the French economy since the election of Emmanuel Macron as president in June, and his government has pushed through a labour reform which it hopes will spur further activity.
Insee sees business investment accelerating to a 3.9 increase this year, from 3.4 percent in 2016.
Households are also expected to increase their investments by 5 percent this year, the highest rate since 2006.
An improvement in the growth rate to 1.8 percent will also be welcomed by the government as it will make it easier to meet its pledge to Brussels to squeeze the nation's public deficit under the EU limit of 3.0 percent this year.
The objective is 2.9 percent.