Bad news for France as central bank predicts economy will contract
The Bank of France has changed it growth estimate for France saying the eurozone's second biggest economy would now likely contract by 0.1 per cent in the second quarter. The central bank previously expected growth to be essentially flat in the three months from April through June.
If the figures are confirmed it would be the first quarterly contraction since France pulled out of recession in 2009.
A second contraction in the third quarter would mean that France joined other EU countries like Britain, Greece, Italy, Portugal and Spain in recession.
In its latest outlook, the national statistics office Insee forecast second quarter economic growth of 0.2 per cent, but the figure was issued in March and several indicators released since then suggest it could be revised lower.
The French customs service reported meanwhile on Friday that the national trade deficit deteriorated in April to 5.8 billion euros. But the public deficit declined by 1.5 billion euros in April from the same month a year earlier, owing to increased tax revenues and a one-off boost from the sale of fourth-generation telephone frequencies, the budget ministry said.
Meanwhile, French unemployment climbed higher in the first quarter of 2012, hitting the symbolic level of 10 per cent, up by two pe rcent from the previous three-month period INSEE said Thursday. The level is has not reached that last seen in 1999.
The European Commission has forecast overall growth this year of 0.5 per cent in France, in line with budget predictions by the new Socialist French President Francois Hollande.
But the Commission expects growth next year of 1.3 per cent, against a forecast of 1.7 per cent under Hollande's economic programme.