BRUSSELS (MNI) – French economic growth is likely to remain
sluggish in the second half of this year, with quarterly GDP gains of
0.2% in both 3Q and 4Q, the European Commission predicted Thursday,
trimming its full-year growth forecast to 1.6% from the 1.8% rate it had
projected last spring.
“High uncertainty” associated with the Eurozone debt crisis “is
weighing on consumer confidence but is also increasingly affecting
investment decisions,” the Commission noted, adding that the external
environment is also “less buoyant” than expected in spring.
Despite historically low interest rates, investment and private
consumption are projected to weaken in the second half, with high
unemployment weighing on wage gains.
The latest fiscal consolidation measures are not expected to affect
economic activity “significantly” as they amount to only 0.05% of GDP,
the Commission estimated.
Little support is expected from export demand, though falling
imports could still allow a contribution from foreign trade, it said.
The annual HICP inflation forecast was trimmed only slightly to
2.1% from 2.2%, “as the impact of lower oil prices is offset by various
measures associated with the latest fiscal package, notably the increase
of excise taxes,” the Commission explained.
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