10-5-17 12:14 PM EDT | Email Article

By William Horobin

 

PARIS--France's national statistics bureau Thursday raised the country's growth forecast for 2017, highlighting an uptick in the eurozone's second-largest economy that is bolstering president Emmanuel Macron as he pursues contentious overhauls.

National statistics bureau Insee said it expects gross domestic product to grow 1.8% this year after three years of "modest growth" at around 1%. In its previous report in June, Insee forecasted 1.6% GDP growth in 2017.

"From now until the end of the year, activity will continue to advance vigorously and in all sectors," Insee said in an economic report Thursday.

France's economy outpaced the statistics bureau's initial expectations in the second quarter when exports rebounded, consumer spending growth accelerated and investment continued to grow.

The stronger underlying economy could help cushion Mr. Macron as he pushes through a budget with tax cuts for the wealthy and spending cuts in housing and government-sponsored jobs schemes.

The measures have sparked a backlash from leftist opposition lawmakers and unions who say the budget is too favorable to the rich. Mr. Macron's government says the cuts to wealth taxes will spur investment and spending cuts are needed to repair the country's finances.

In its report Thursday, Insee said France's industry will benefit from firm foreign demand and the construction sector will expand with strong demand for housing. The statistics agency said household investment will grow 5% this year after 2.4% in 2016. Insee previously forecast a 3.7% expansion in household investment in 2017.

Insee also revised up its forecast for business investment growth to 3.9% this year from 2.9% in June's report.

Despite the acceleration in economic growth, Insee did not adjust its unemployment forecasts from June. The statistics bureau still expects unemployment to register at 9.4% at the end of 2017, compared with 10% at the end of 2016.

 

Write to William Horobin at william.horobin@wsj.com

 
 

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October 05, 2017 12:14 ET (16:14 GMT)

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