Eiffel Tower in fog

Jan 19 - Analysts remain downbeat on France's economic prospects for 2011, expecting the country's recovery to be steady but slow in the face of budget austerity and rising inflation, a Reuters poll on Wednesday showed.

A quarterly survey of around 20 economists conducted over the past week forecast gross domestic product in the euro zone's second largest economy to rise by a modest 1.5 percent in 2011, matching the expected rise in 2010.

Although up slightly from October's poll forecast for 1.4 percent growth in 2011, the reading is still firmly below the government's official growth target of 2.0 percent.

French growth has lagged behind that of its biggest trade partner Germany, with Berlin forecasting growth this year of 2.3 percent after 3.6 percent in 2010 -- easing from the fastest rate of expansion since reunification.

The median forecast for French inflation is 1.7 percent in 2011, up from October's poll outlook for 1.5 percent.

"We have trouble supporting the (government's) optimistic scenario because there are a number of clouds on the horizon," said Cyril Blesson, economist at consultancy Pair Conseil.

"We've got varous countries implementing significant budget tightening, the risk of another global slowdown and then the sharp rise in oil prices," he said.

Crude prices are fast approaching $100 a barrel, forcing up costs at the petrol pump and putting severe pressure on households and businesses.

In addition, consumers are bracing for the impact of spending cuts and the removal of certain tax breaks, both of which have been weighing on confidence and on spending patterns.

Recently released data showed France's January sales got off to a subdued start last week, with turnover at the main clothing retail outlets falling some 4 percent year-on-year, according to France's FEH federation of clothing brands.

Economists also expect budget tightening in neighboring economies to put a brake on French exports, weakening the contribution of trade to GDP.

The one saving grace in the outlook for the French economy, however, could be the recent weakening of the euro, which will help boost exports and should also boost demand for domestic goods by making imports more expensive.

The euro shed close to 10 percent of its value against the dollar between November and early January, although it has since clawed back some of those losses.

"If the euro stays around current levels, or falls further, then we should see another pick-up in growth," said Marc Touati from Assya Compagnie Financiere, who expects French GDP to expand by 2.0 percent in line with the government.

By Vicky Buffery
(Editing by John Stonestreet)