FRANCE HAS LITTLE ROOM FOR MANOEUVRE, OECD SAYS French industry is failing to produce the goods its markets need and its loss of competitiveness has left the government little room for manoeuvre to reflate the economy, the Organisation for Economic Cooperation and Development said. With gross domestic product likely to grow only 2.1 pct this year, the same rate as last year, unemployment could climb to 11.5 pct of the workforce by mid-1988, from its present 10.9 pct, it said in an annual review of the French economy. The report said the French economy was "increasingly ill-adapted to demand" selling goods at "uncompetitive relative prices on both domestic and export markets." "France's poor export performance reflects a geographical bias in favour of markets less dynamic than the average... And...A substantial loss of market share...In the past 18 months," it said. Pointing to a likely widening of the French trade deficit to around 2.9 billion dlrs this year from 2.4 billion in 1986, it warned that a further depreciation of the dollar against the franc could lead to "a (renewed) loss of competitiveness relative not only to the United States but also to the newly industrialised countries." This could result in further major losses of market share, particularly in the non-OECD area, which accounts for almost a quarter of French exports, it said. Until the competitive ability of industry improved, the authorities would have "little scope for macroeconomic manoeuvre, even if the unemployment situation or the need to encourage a pickup in investment could require demand to grow more briskly," it added. But rising unemployment could help to hold down wage demands, contributing to a slowdown in inflation to around a two pct annual rate this year and early next, the OECD said. Written mainly in December last year, the report took no account of a rise in oil prices early in 1987, and a 0.9 pct surge in January consumer prices, caused partly by the government's deregulation of service sector tariffs. "We took a bet that the freeing of prices would not provoke runaway rises, and it is not absolutely certain that bet has been lost," one OECD official commented. OECD officials said the January data and a rise in oil prices above the 15 dlrs a barrel average assumed in the report, indicated an upward revision in the inflation forecast to around 2.5 or three pct. The government last week revised its forecast up to between 2.4 and 2.5 pct from two pct, against last year's 2.1 pct. But the OECD backed the government's view that the underlying trend for inflation remained downwards this year, with a slowdown in domestic costs taking over from last year's fall in oil and commodity prices as the chief cause of disinflation. With French unit productivity costs now among the lowest in the OECD area, the inflation differential between France and its main trading rival, West Germany, could fall to just one pct this year, it said. On the other hand, the report noted, consumer prices for industrial goods and private services have been rising steeply as companies built up their profits. "For the disinflationary process to continue , and price competitiveness to become lastingly compatible with exchange rate stability, it is essential that wage restraint continue," it said.