–French Economy Has Turned The Corner

By Yali N’Diaye

WASHINGTON (MNI) – With economic prospects improving, the French
government is sticking to its forecast of a 6% deficit-to-GDP ratio next
year, on track to 3% in 2013, Finance Minister Christine Lagarde said
Friday.

A domestic growth that is back on a positive trend, an unemployment
rate that is steadily declining, exports that are growing again and
private investors who are taking over investments that had been
dominated by the public sector since the beginning of the economic and
financial crisis are all signs the French economy has turned the corner,
Lagarde said following a presentation at the Carnegie Endowment for
International Peace of the French priorities when the country assumes
the 12-month presidency of the G20 starting in November.

“We keep our target of 6% next year to arrive at 3% in 2013,” she
said, falling short of commenting on European debt and deficit issues,
generally or specifically.

And for 2010, the public deficit is likely to be 7.7% of GDP, lower
than the 8.2% currently forecast.

Behind Lagarde’s optimism is her positive outlook for the French
economy.

“While we did suffer” in 2009 when the GDP fell 2.6%, which the
finance minister considers “mild” when compared with the average
negative growth in the euro zone, “we are back up and we have been (up)
for four quarter now,” the finance minister said.

In particular, “the second quarter of 2010 was extremely
encouraging,” which “really leads us to believe that we’ve turned the
corner.”

Looking forward, the French government has revised up its growth
forecast for 2010 to 1.6%, in line with the International Monetary
Fund’s view.

For 2011, Lagarde expects a 2% GDP growth, more optimistic than the
IMF.

She cited three engines that have restarted, supporting French
growth: domestic consumption, private investments and exports.

Recovering domestic consumption is also accompanied by declining
unemployment.

The unemployment rate, which had reached 9.6% at the height of the
crisis, is back down to 9.3% and “we expect 9.2% shortly,” Lagarde said.

“So it’s on the declining path, at a slow but steady pace.”

Besides, she sees signs that “Now, the private investors are back.”

“So I do believe that we’ve turned the corner.”

** Market News International Washington Bureau: 202-371-2121 **

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