Minister: France is out of recession

Minister: France is out of recession
French Economy, Finance and Foreign Trade Minister Pierre Moscovici during the G20 Finance Ministers and Central Bank Governors' meeting in Moscow. AFP Photo/Kirill Kudryavtsev
Finance Minister Pierre Moscovici has said the economy is out of recession but has revised down the country's growth for this year, estimating gross domestic product will end up somewhere between -0.1 percent and 0.1 percent.

The French government had been expected to present a modest growth of around 0.1 percent, still judged by economists to be insufficient to reduce unemployment.

Despite the government's revision, the minister told the Nice Matin newspaper that the "French economy is out of recession and is recovering to be more sustainable, stronger and able to create more jobs".

"What is important is that the trend has reversed," said the minister.

"After two quarters of negative growth, the last quarter of 2012 and the first of 2013, the second and third quarters of 2013 will experience positive growth," he predicted, adding that "all indicators would improve, starting with industrial production".

"I have every reason to believe that 2014 will be the first year of real growth for three years," said Moscovici.

Despite this, the economy's stagnation in 2013 complicates preparations for next year's budget.

The minister indicated to Nice Matin that the 2014 budget, to be revealed in the next few weeks, will make a provision for an increase in the tax burden equivalent to 0.3 percent of gross domestic product.

"We must reduce the deficit… but at a pace which does not upset growth.

"First, in line with International Monetary Fund recommendations, we will reduce public spending, then by a limited increase in the tax burden of 0.3 percent, in line with social justice," said Moscovici.

In its annual report on the French economy, published Monday, the IMF estimated that Paris had begun to "stabilise deficits" but should slow down the pace of austerity.

It recommended France continue its efforts but to rely more on spending cuts and less on tax increases.

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