Recession beckons as euro woes hit France
Source: Agencies |
August 9, 2012, Thursday
|
Print Edition
Print Edition
FRANCE'S economy is likely to slip into a shallow recession in the third quarter, the Bank of France said yesterday, dashing hopes for a robust recovery this year and adding to signs that Europe's economic prospects are worsening.
The central bank's forecast for gross domestic product to shrink 0.1 percent in the three months to September, following last month's estimate of a similar fall in the second quarter, suggests France's 2-trillion-euro (US$2.5 trillion) economy will struggle to meet this year's government growth target of 0.3 percent.
The weak outlook was reinforced by figures showing France's trade gap widened to 5.99 billion euros in June, from a downwardly revised 5.47 billion euros in May, dashing economists' expectations for the deficit to narrow.
Exports to Italy, Spain and Britain slumped, with sales of cars and transport materials particularly weak.
Southern European economies are already mired in recession as governments try to tame a debt crisis by pursuing austerity measures, and yesterday's data added to signs that Europe's biggest economies are also stagnating. Britain's central bank has slashed its economic forecast and warned that factors weighing on growth may be more long-lasting than previously thought.
"The outlook for the coming months suggests a slight slowdown in economic activity," the Bank of France said. "GDP is expected to decline by 0.1 percent in the third quarter."
French President Francois Hollande, elected in May on a pledge to halt rising unemployment and reverse industrial decline, has been confronted since taking office by a round of industrial layoffs and the need to curb spending to meet deficit targets.
The Bank of France's monthly survey showed industrial business sentiment in July at its weakest since August 2009, with automotive and textiles firms particularly gloomy.
Service companies were also more negative, especially in transport and administration, with the sentiment indicator at its weakest since November 2009.
France is due to publish data on second quarter economic growth next Tuesday.
The central bank's forecast for gross domestic product to shrink 0.1 percent in the three months to September, following last month's estimate of a similar fall in the second quarter, suggests France's 2-trillion-euro (US$2.5 trillion) economy will struggle to meet this year's government growth target of 0.3 percent.
The weak outlook was reinforced by figures showing France's trade gap widened to 5.99 billion euros in June, from a downwardly revised 5.47 billion euros in May, dashing economists' expectations for the deficit to narrow.
Exports to Italy, Spain and Britain slumped, with sales of cars and transport materials particularly weak.
Southern European economies are already mired in recession as governments try to tame a debt crisis by pursuing austerity measures, and yesterday's data added to signs that Europe's biggest economies are also stagnating. Britain's central bank has slashed its economic forecast and warned that factors weighing on growth may be more long-lasting than previously thought.
"The outlook for the coming months suggests a slight slowdown in economic activity," the Bank of France said. "GDP is expected to decline by 0.1 percent in the third quarter."
French President Francois Hollande, elected in May on a pledge to halt rising unemployment and reverse industrial decline, has been confronted since taking office by a round of industrial layoffs and the need to curb spending to meet deficit targets.
The Bank of France's monthly survey showed industrial business sentiment in July at its weakest since August 2009, with automotive and textiles firms particularly gloomy.
Service companies were also more negative, especially in transport and administration, with the sentiment indicator at its weakest since November 2009.
France is due to publish data on second quarter economic growth next Tuesday.
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