French recession might ease by year end
Recession in the French economy, the worst for 60 years, might ease at the end of the year unless surging unemployment blocks recovery, an official agency said. The economy will contract by three per cent this year, the national statistics agency INSEE...
Recession in the French economy, the worst for 60 years, might ease at the end of the year unless surging unemployment blocks recovery, an official agency said.
The economy will contract by three per cent this year, the national statistics agency INSEE forecast in its latest estimates. This would mark the deepest recession since 1949.
Output shrank by 1.2 per cent in the first quarter, is expected to show contraction of 0.6 per cent in the second quarter, and 0.2 per cent in the third quarter, then steadying in the last quarter of the year.
"Overall, the fall of activity would be sharp in 2009, with gross domestic product dropping by three per cent, or the biggest contraction since 1949," the head of the assessment department at INSEE, Benoit Heitz, said. This outlook is in line with the most recent forecast by the French government.
The government expects the economy to shrink by three per cent this year, and to show growth of 0.5 per cent in 2010. INSEE said the worst point of the economic crisis seemed to have been reached in the first quarter of this year and that less negative signals were being seen.
Tension on financial markets had eased markedly, INSEE said.
And the first effects of various plans to boost activity should have the effect of reducing the intensity of the recession by stages, in France and in leading developed countries.
French exports, which had fallen heavily at the beginning of this year, would show improvement at the end of the year.
But the number of people in work, which had fallen sharply since the second half of last year, was likely to fall back even faster this year.
INSEE said it expected 590,000 jobs to be lost in 2009, pushing the unemployment rate up to 10.1 per cent for the first time since 1999.
The economy ministry has also said that "the deterioration of the labour market is likely to continue for several more quarters".
INSEE said that the course of employment was "highly uncertain" and was a threat to the speed of recovery from recession.