Roundup: Unexpected growth rebound provides relief in France, but cautions remain

Data issued by French statistics institute Insee on Wednesday showed the country's gross domestic product (GDP) in the first quarter 2015 increased by 0.6 percent, the first such strong performance in two years.

Is the unexpected economic recovery robust enough to help the Socialist President Francois Hollande to gain back voters' confidence and honor his promises of better revenue and more jobs?

Beating grim estimates, the second largest economy in the single-currency bloc outpaced for the first time its European partners which reported 0.4 percent growth.

In its report, Insee said consumers expenditure increased significantly by 0.8 percent in the first quarter, up by seven percentage points from the last quarter of 2014, a positive trend which means resilient output of domestic firms and growing inventories to meet a growing purchasing appetite.

To Manuel Valls, French Prime Minister, the fresh rosy figures mirrored that France "is recovering although the growth is still insufficient to bring down unemployment."

"We are in the right path and we don't change our policy if we are following the right one," Valls added, in response to rising criticism over the government broken promises to devotes on its economic pledges.

"Following the economic cycle, I think after five years of recession, the recovery will be solid enough after the unexpected quarterly growth data," said Jean Marc Daniel, an economist.

"The economic situation is improving because of cheap energy products that incited people to consume more and encouraged companies to produce further and beef up their stocks to satisfy an expected growing demand. However, the challenge is that these companies move to investment to increase significantly production and start recruiting," Daniel added.

The figures released by Insee also showed industrial output rose by 1.3 percent over the period after reporting almost unchanged trend over the last quarter of the previous year, while investment lost 0.2 percent.

In a note, Dominique Barbet, an economist at BNP Paribas bank noted that tepid firms investment over the first three months of the year tainted the euphoria of a strong and sustainable growth.

"Today's investment is tomorrow's potential growth and 0.2 percent of business investment is insufficient to create dynamism," she said.

Speaking to the news channel BFMTV, Finance Minister Michel Sapin said he saw "recovery signs", but the better-than-expected economic performance "doesn't allow to lower the unemployment."

"0.6 percent (growth rate) during a quarter is good but it's better to report 0.6 percent over all the quarters of the year," the minister said.

Sapin also expected the French economy to expand more quickly than expected this year, with the GDP now forecasted at more than 1 percent compared to 0.4 percent in 2014. Endit