French economy faces recession in third quarter, forecast

The Bank of France predicts that the French economy is about to hit recession with a forecast of 0.1 per cent contraction in the third quarter of this year, following negative growth in the second.

Reuters/Gonzalo Fuentes

France came out of recession in the spring of 2009 but has probably entered it again, the

bank believes, confirming a prediction it already made at the beginning of July.

In the first quarter of this year the French economy had no growth at all, while in the second it experienced a 0.1 per cent contraction.

Economists define recession as two consecutive quarters of contraction.

The prediction is more grim news for President François Hollande's government as the unemployment  rate heads for 10 per cent and companies declare thousands of layoffs.

Economy Minister Pierre Moscivici admitted that he was “worried” France’s growth

figures at the beginning of this month but said he would not be lowering the government’s forecast of 0.3 per cent in 2012 and 1.2 per cent for 2013.

Those figures had already been scaled back from 0.4 per cent in 2012 and 1.7 per cent in 2013.

France’s trade deficit increased to 5.99 billion euros in June thanks to a sharp decline in exports in the transport sector.

France’s trade deficit increased to 5.99 billion euros in June thanks to a sharp decline in exports in the transport sector.

As the European economy's troubles drag on, Chinese company CNR announced Thursday that it is to become the first Chinese manufacturer to export parts for high-speed trains to the continent after singing a deal with German firm Siemens.

In developing its TGV trains, France was a pioneer in high-speed train travel and exports to several countries.