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Saturday 26th of February 2011
December 19, 2008    

France heading for recession

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by Kay Murchie
France heading for recession

Europe’s second largest economy is heading for a recession next year, according to Insee, France’s national statistics agency.

Europe’s largest economy, Germany, entered a recession in November after gross domestic product (GDP) fell by 0.5% in the third quarter. This followed a 0.4% fall in the second quarter.

A country is considered to be in recession when it experiences two consecutive quarters of negative growth.

Insee said the French economy contracted by 0.8% in the last quarter of 2008 and will shrink by a further 0.4% in the first quarter next year.

Earlier forecasts said the economy would contract by just 0.1% from October and December.

Meanwhile, the organisation is forecasting that unemployment in France would rise to 8% by the middle of 2009, up from the current 7.7% .

French credit insurer, Euler Hermes, recently forecast a decline in French GDP of 0.5% next year, while consumer spending, which is the main force behind the country’s economy, should start to rise steadily from the middle of next year.

However, France is faring better than its neighbours, who have already notched up two quarters of negative growth. As a group, the 15-member euro zone has been in a recession since the second quarter.

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