France to fall into recession this year: IMF
AFP/The Local · 16 Apr 2013, 15:16
Published: 16 Apr 2013 15:16 GMT+02:00
- French debt making Europe 'vulnerable' (10 Apr 13)
- France has 'no choice' but to freeze benefits (10 Apr 13)
- France's jobless rate approaches record high (26 Mar 13)
In its latest revisions, the International Monetary Fund dropped its previous forecast of 0.3 percent growth this year, but still expects the French economy to rebound by 0.9 percent in 2014.
France's growth is forecast to be negative in 2013, reflecting a combination of fiscal consolidation, poor export performance, and low confidence," the IMF's chief economist Olivier Blanchard said in the foreword to its latest World Economic Outlook report.
The IMF's latest forecasts are more pessimistic than those the French government will sign off on Wednesday as part of its plan to get its public deficit back under the EU limit of 3.0 percent of output by 2014.
In line with the European Commission, the French government will forecast 0.1 percent growth this year and a rebound of 1.2 percent in 2014.
The slow growth rate means that France has to make more of an adjustment in terms of increased taxes and spending cuts to get the deficit down, which in turn could slow growth further.
The IMF's Blanchard noted that in conjunction with Germany posting growth of less than one percent this year, the recession in France "may call into question the ability of the (eurozone) core to help the periphery, if and when needed."
The IMF expects the French unemployment rate to continue rising steadily, from 10.2 percent in 2012, to 11.2 percent this year and 11.6 percent in 2014.