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Bank of France maintains 3Q contraction forecast for economy  Join our daily free Newsletter

MENAFN - Kuwait News Agency (KUNA) - 09/10/2012

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(MENAFN - Kuwait News Agency (KUNA)) The French Central Bank on Monday said it was maintaining a negative growth forecast for the economy here in the third quarter, predicting a weaker performance than other major, local statistics organs.

The Bank said in its monthly report that Gross Domestic Product (GDP) for the July-September quarter will contract by 0.1 percent, while the National Statistics Institute (INSEE) has been projecting zero growth for the period.

The contraction would be psychologically damaging because two successive quarters of negative growth would put France officially in recession, a situation it has not known for three years. Many economists are saying that the fourth quarter will have no growth but there is also a risk of a contraction.

The government is predicting the economy will grow this year by a tepid 0.3 percent, overall, but that the situation will improve in 2013. Some observers here point out that the government target of 0.3 percent is overly optimistic and the economy has not grown now for almost a full year.

At the same time, unemployment has risen officially above three million jobless, but if partially unemployed and others are included, the figure is close to five million, Prime Minister Jean-Marc Ayrault admitted here last month.

Ayrault says he is determined to reduce France's deficit to 4.5 percent of GDP this year in line with commitments to get spending down. He also intends to raise taxes on the very rich and reduce tax deductions for many in the higher brackets.

 






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