French economy accelerates in 1st quarter

[May 13, 2011]  PARIS (AP) -- France's economy accelerated in the first quarter thanks to higher consumer spending and corporate investment, the national statistics office said Friday.

The French economy grew 1 percent in the first quarter, the Insee statistics agency said, well above the 0.3 percent growth in the last quarter of 2010 and faster than the 0.6 percent that the Insee forecast in March,

Imports outpaced exports in the quarter due largely to the rising price of oil, the Insee said.

French Prime Minister Francois Fillon said Thursday he was confident France would achieve its targeted 2 percent economic growth this year, after 1.5 percent growth in 2010.

France is counting on economic growth to help it achieve a long-postponed target of bringing its budget deficit into line with its commitment to European partners. After a deficit of 7 percent last year France aims to reduce it to 5.7 percent this year and 4.6 percent in 2012.

France targets a deficit of under 3 percent in 2013, three years later than President Nicolas Sarkozy had pledged before the financial crisis led to ballooning deficits across Europe.

One French economist tempered his positive assessment of the first-quarter performance, saying France had picked the low-hanging fruit of its economic turnaround.

"We must prepare for a much more difficult second and third quarters," economist Marc Touati of Global Equities said in a research note to clients.

Much of the first quarter's economic growth came from heavy inventory building by industry, Touati said, while the gains from last year's rebound from the recession of 2008-2009 have largely been achieved. That means French growth should return to its annual average of between 1.2 percent and 1.8 percent, Touati said.

[Associated Press; By GREG KELLER]

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