French economy gets double hit of bad news

French economy gets double hit of bad news
France's central bank is not optimistic about the performance of the French economy. Photo: Joel Saget/AFP
French President François Hollande will not be enjoying his holidays after there was a double serving of bad news for the French economy this week.

On Friday fears that the French economy is grinding to halt were increased when the Bank of France forecast that it would grow at a rate of 0.2 percent in the third quarter of the year.

The gloomy forecast came after new data revealed France’s trade deficit widened once again in the first six months of 2014 to €29.2billion.

But Hollande will be most concerned about the new gloomy growth forecast by the Bank of France.

National statistics agency INSEE had predicted the economy would expand by 0.7 percent over the whole year and the government itself had forecast 1 percent growth.

But with only 0.2 percent likely according to France’s central bank the government, which is under pressure from Brussels to reduce its public deficit, is unlikely to meet its targets.

Hollande recently called on Germany to do more to boost growth in the Eurozone saying it would be “the best service for France”.

However German leaders dismissed his plea, insisting that Berlin was doing quite enough as it is.

In terms of the trade gap Frederik Ducrozet at Credit Agricole said it was smaller because imports were falling, rather than because exports were rising, "which suggests that domestic demand is weakening".

"Our results in terms of trade have less to do with external factors thanour own domestic weakness," he said.

French Trade Secretary Fleur Pellerin said in an interview with Le Figaropublished Thursday that while the deficit is not "satisfactory," it was still the lowest for a half year since 2010.

In the full year, she said the government still expects to cut France'sdeficit to 53 billion euros, from 60 billion last year and the record 74 billion hit in 2011.

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