French economy recovers in 2002

PARIS, France -- The French economy, the euro zone's second largest, grew in the first three months of this year after contracting in the previous quarter.

Gross domestic product rose 0.4 percent in the first quarter, after a decline of 0.4 percent in the fourth-quarter of 2001, the national statistic office INSEE said on Friday. First quarter growth was in line with economists' expectations, according to a Reuters poll.

France has recovered slightly faster than other major eurozone economies, which flirted with recession last year. Both Germany and Italy posted economic growth of 0.2 percent in the first quarter of this year.

Together, France, Germany and Italy account for 75 percent of the economy of the 12-nation eurozone.

Economists expect France to continue leading eurozone's recovery, with most calling for growth of around 0.5 percent in the second quarter and 1.2 percent for the entire year.

"Almost all the elements of economic recovery are there. Investment is resilient and even showed a faster rebound than expected," Marc Touati, an economist at Natexis Banque Populaire, told Reuters.

Touati said France would not be able to eliminate its deficit by 2004 -- as required by the European Union -- but begin narrowing the gap this year.

"The deficit goal for 2004 is near impossible to achieve. In order to realise it, we need 4 percent over the next two years, which is not likely to happen. The year 2007 is a more realistic date for budget balance," he said.

INSEE said overall investment rose 0.2 percent in the first quarter from the last three months of 2001. Investment by companies edged up 0.1 percent.

Consumer spending, which remained solid during the slowdown last year, grew 0.2 percent in the first quarter.