PARIS, Nov 17: The French economy ministry said on Wednesday that it was standing by its forecast that the economy would grow by about 2.5 per cent this year. The figure of 2.5 per cent for average French growth appeared in a budget statement presented to a cabinet meeting by Economy and Finance Minister Nicolas Sarkozy.

The statement said that a slowdown of activity reported in the third quarter did not reflect the underlying trend. "2004 is the year of recovery in Europe and particularly in France," the ministry said. "In our country growth exceeded 2.5 per cent at an annual rate in the first half."

The figures were growth of 0.7 per cent in the first quarter from the equivalent figure last year and 0.6 per cent in the second quarter, but this fell to 0.1 per cent in the third quarter.

"The slowdown in the third quarter, owing notably to a less favourable international environment, does not reflect the trend of activity. Surveys of what is happening in industry, in services and in the construction sector, show a favourable trend which will show up in the figures for the fourth quarter."

The ministry said that the expected rebound in the fourth quarter, and a high number of working days this year (because several holiday days fall at the weekend), led it to stand by its forecast that the economy would grow by about 2.5 per cent on average this year.

The statement said that a number of initiatives by the government, such as raising the minimum wage by 5.8 per cent in July, easing tax regulations temporarily on cash gifts within families and other measures facilitating the withdrawal of money from savings schemes, together with pressure on supermarkets to reduce prices, would also help to bolster demand in the next few months. -AFP