French economy to grow just 0.4% in 2014

PARIS (AFP) - The French economy is headed for growth of only 0.4 per cent this year, according to official data, in line with estimates given in a grim budget statement by the finance minister earlier.

"The French economy should barely grow in third and fourth quarters (+0.1 percent), bringing growth over the year as a whole to 0.4 per cent in 2014," as in the previous two years, the national statistics office INSEE said in its latest report late on Thursday.

The French economy was "unlikely to see a real upturn" in 2014, INSEE said. But the agency made no mention of its outlook for 2015, which has become the focus of attention after Finance Minister Michel Sapin on Wednesday predicted 1.0 per cent growth next year.

Despite the already low figure, the country's public finances watchdog immediately attacked the government for being too optimistic in its forecast.

In a statement, the High Council of Public Finances said that poor recent data doesn't point to the rapid pickup in activity needed to reach a one-per cent growth rate next year.

It also said the government's projections for 1.7 per cent growth in 2016 and 1.9 per cent in 2017 were based on "over-favourable hypotheses for the international environment and investment".

France is battling through a deep economic crisis, with zero growth in the previous two quarters and sky-high unemployment.

The response of President Francois Hollande's deeply unpopular government has been a controversial package of tax breaks for companies financed by cuts in public spending.

According to INSEE, the unemployment rate in the second quarter of 2014 stood at 9.7 per cent, and was likely to climb to 9.9 per cent by the end of the year.