IMF ups France, eurozone growth predictions

France’s economic growth will be better than expected this year, according to the International Monetary Fund (IMF), but presidential candidates are unjustifiably optimistic about prospects for next year. The eurozone will also perform better than predicted, the fund said Tuesday.

AFP

The IMF previously expected a miserable 0.2 per cent growth for France in 2012 but has now raised its prediction to 0.5 per cent.

And growth will continue in 2013 but at a disappointing 1.0 per cent, it predicts.

Unemployment will continue to rise from 9.9 per cent to 10.1 per cent, the fund believes.

The leading candidates in this year’s presidential election are hoping for a stronger performance.

Incumbent Nicolas Sarkozy’s economic plans depend on 0.7 per cent growth in 2012 and 1.75 per cent in 2013. Socialist François Hollande is working on the basis of 0.5 per cent this year and 1.7 per cent next year.

The IMF believes that more cheap funding for lenders from the European Central Bank will mean that the whole eurozone will suffer a milder recession than forecast.

Instead of a 0.5 per cent drop in output, there will be a 0.3 per cent fall, according to its predictions, and next year will see 0.9 per cent instead of 0.8 per cent.

The IMF predicts growth this year in France, Germany and Ireland but a fall in output in Greece, Italy and Spain:

• Germany: +0.6 per cent (up from +0.3 per cent);
• France: +0.5 per cent (up from 0.3 per cent);
• Italy: -1.9 per cent (previously -2.2 per cent);
• Spain: -1.8 per cent (previously -1.7 per cent);
• Portugal: -1.8 per cent;
• Greece: -4.7 per cent.

Italy’s recession will drag on into 2013 with 0.3 per cent contraction, the fund believes, but Spain will experience 0.1 per cent growth, instead of 0.3 per cent contraction.