IMF: French growth weak, deficit target unlikely
The International Monetary Fund has warned that France’s growth outlook “remains fragile” and meeting a target to reduce public deficit by three per cent next year looks unlikely.
"Growth remains sluggish and the near-term outlook is subject to downside risks," IMF executive directors said in a statement on Friday.
The IMF forecasted France’s 2013 deficit would not fall below 3.5 per cent and growth would drop from 1.7 per cent in 2011 to 0.2 per cent in 2012.
The annual assessment predicted the country’s job creation will remain subdued which will see unemployment rise, warning efforts by European governments to reduce their deficits will continue to depress demand.
"The recovery of the French economy is also hampered by a loss of competitiveness which is reflected in a steady loss of export market share and low profit margins relative to European partners," it said.
President François Hollande is hoping growth will recover to 0.8 per cent next year.
The Socialist Party’s 2013 budget is built on an expectation of reducing its annual deficit to three per cent of GDP, a threshold imposed on members of the Eurozone single-currency bloc.