French Economy Grows 1.1%

Robust consumer spending, non-finance business investment and healthy international demand, notably in neighboring Germany are reasons cited by analysts to explain the French economic growth surge of an unexpected 1.1% in the second quarter. The growth, as determined by a second estimate, exceeded forecasts of just 0.6% to 0.7% and was sharply higher than the first quarter figure of 0.5% according to national statistics institute INSEE.

Analysts are now foreseeing yearly momentum of between 2.2% and 2.5% after a disappointing performance in 2005.

Companies boosted investment by 1.8% in the quarter, notably to take advantage of a booming German economy by building up inventories said Alexander Law of the financial analysis group Xerfi. "The problems French companies have in competing (abroad) are far from being resolved," he added.

Copyright Agence France-Presse, 2006

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