France unlikely to hit 2012 growth target, LSR argues

France’s official growth forecast of 1.7% for next year is “very optimistic” after the country posted its latest batch of economic data, according to Lombard Street Research.

Earlier today, France – the eurozone’s second largest economy – confirmed that GDP grew by 0.4% in the third quarter, following a 0.1% contraction in the second.

Michael Taylor, a senior economist at Lombard Street Research, writes in his latest note that third-quarter growth was driven by a “revival” in consumer spending, after a surprise decline was reported in the preceding quarter.

However, Taylor points out that consumer spending remains below its 2010 year-end level and is unlikely to rebound further any time soon. In addition, he says recent economic surveys suggest activity is slowing in the country’ other sectors.

“Today’s data means that France is on-course for close to 1.4% GDP growth this year,” the economist says. “But the underlying lack of momentum in the economy points to around 1% growth for 2012.”

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