PARIS, July 19 (Xinhua) -- With the French economy demonstrating a great sense of resilience in the face of a global slowdown, the International Monetary Fund (IMF) has revised its growth forecasts for the country for 2008 upwards, according to a new report.

    Possibly taking the cue from France's National Institute of Statistics and Economic Studies (INSEE), the IMF is now projecting that the economy will grow by up to 1.6 percent for 2008 against a 1.4 percent forecast three months ago.

    The report, which was published Thursday, is coming shortly after the end of an IMF review mission to the country, according to the French media.

    According to the IMF report, which appears to borrow heavily from recent remarks by French Economy Minister Christine Lagarde, the French financial system "had responded well" in the wake of the global crisis, but there are concerns about the budgetary situation.

    For 2009, the organization, whose head is Frenchman Dominique Strauss-Khan, is now predicting a growth rate of 1.4 percent compared to 1.2 percent previously. Nevertheless, the IMF noted that this level is slightly below the average for the euro zone expected to reach 1.7 percent in 2008.

    On its part, the French government has revised its growth projection wording from a range of between 1.7 percent and 2 percent to "closer to 1.7 percent than 2 percent for 2008."

    "Despite a better than expected first quarter," France is facing the effects of the global financial crisis, soaring oil and raw material prices, economic slowdown among its trading partners and a strengthening euro, according to the IMF report.

    However, the report, similar to sentiments expressed by the finance minister, indicated that France's growth rate is set to experience a rebound "during the second half of 2009, resulting in a relatively moderate slowdown compared to historical standards."

    The risks to this situation are "high," said the IMF, notably citing the fact that "the financial situation remains tense" particularly with regard to "the credit market" and the "uncomfortable levels of the inflation rate."

    On Wednesday, INSEE, which is France's statistics institute, announced that the inflation rate stood at 3.6 percent in June in what marked a 17-year peak.

    However, excluding energy and food products, the price increase was much lower, said the IMF report, which seems to suggest that the French economy had largely avoided the contagious effects of inflationary pressures, something that is generally good for the country.

    In the report, the IMF noted that "France was moving in the right direction," but it nevertheless called "for the acceleration of reforms" and urged a quick return to fiscal discipline.

    "Having failed to implement these reforms when the economic situation was more accommodative," currently France finds itself lacking "more fiscal leeway to cope with today's economic shocks," according to the report.

    Further, the report encouraged the French government to stimulate competition and employment, and also advised against a reduction of the soaring oil prices in order to send a strong long term signal to consumers, except for the most vulnerable populations who may be the subject of targeted aid.

    In what appears to be a boost to French President Nicolas Sarkozy's efforts, the IMF welcomed the proposed Economic Modernization Act, which, according to the fund, will enable the country in "dealing with global challenges, unblocking the rigidities of the market for products and services and benefit consumers."

    In addition, the IMF report encouraged the government to gradually reduce unemployment benefits or put in place a progressive sanctions regime, which is currently being envisaged, as it is a "more effective way of forcing people to find new employment opportunities."