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UPDATE 2-France lifts 2010 GDP forecast to 1.4 pct

Published 01/18/2010, 01:41 PM

(Adds Noyer comment, deficit report)

PARIS, Jan 18 (Reuters) - The French government has lifted its forecast for gross domestic product growth in 2010, almost doubling it to 1.4 percent from 0.75 percent previously, Economy Minister Christine Lagarde said on Monday.

The new figures will be included in a budget update to be released on Wednesday, which should also point to a slightly better-than-expected deficit figure.

"The international environment and demand for French products has improved and this has led us to revise our growth forecast from 0.75 to 1.4 percent," Lagarde told reporters after meeting government ministers.

Bank of France Governor Christian Noyer said he thought the new forecast was reasonable.

"1.4 percent is probably quite a realistic forecast as far as we can determine today because it's exactly what the consensus of economists shows," Noyer told LCI Television.

The euro zone's second-biggest economy is expected to have contracted some 2.25 percent last year, with the budget deficit seen at 8.2 percent of gross domestic product.

The deficit is forecast to climb to 8.5 percent this year, but Le Figaro newspaper reported on Monday this estimate would be lowered to 8.2 percent when the budget update was unveiled.

International Monetary Fund officials warned on Monday that Europe's economic upturn remained fragile and required that governments and central banks stay the course with steps to stimulate growth taken since 2008's financial ructions.

Germany's Bundesbank said the pace of its recovery was slowing as consumer spending on cars and retail purchases tails off, although it said the recovery process remained intact.

France's previous growth forecasts were made in September, but officials have been hinting at an upward revision.

"The situation in the French economy improved towards the end of 2009 and our forecasts for the start of 2010 have also brightened," said Lagarde. (Reporting by Tamora Vidaillet; Editing by Crispian Balmer)

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