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French Economic Growth to Slow in 2007
Real estate news By Francois de Beaupuy
October 3, 2007 18:08 EDT
French economic growth will slow this year as higher borrowing costs stemming from the plunge in U.S. subprime mortgages curb real-estate spending, the French statistics office said, lowering its previous forecast. Growth in Europe's third-biggest economy will slow to 1.8 percent this year, compared with a June forecast of 2.1 percent and 2006 expansion of 2 percent, said the statistics office, known as Insee. ``This summer's financial turmoil has darkened the prospects for global growth,'' Pierre-Olivier Beffy, an Insee economist, said at an embargoed briefing yesterday in Paris.
French President Nicolas Sarkozy has cut taxes and aims to loosen labor laws and service-market rules to boost a rate of expansion that's set to lag behind the euro region for a second year. The Organization for Economic Cooperation and Development, which cut its French forecast last month, expects the 13-nation euro region to expand 2.6 percent in 2007. Gross domestic product in France probably grew 0.7 percent in the third quarter from the previous three months and may expand 0.5 percent in the fourth, Insee said.
While growth in consumer spending probably accelerated to 0.9 percent in the third quarter, investment in residential real estate may have fallen by 0.1 percent. Consumers may increase purchases by 0.7 percent in the fourth quarter and real-estate investment may rise by 0.1 percent in the period, Insee forecast. French house prices fell in the third quarter for the first time since 1998, according to Bank of America Corp. economist Gilles Moec, citing the national realtors' association.
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