French economic growth in the third quarter will drop to minus 0.1%, according to the Bank of France, signalling a recession.
The Bank of France downgraded its forecast for French economic growth in the third quarter to minus 0.1 percent on Tuesday from plus 0.1 percent estimated a month ago, signalling a recession.
Since the official statistics institute INSEE has already reported that the economy contracted by 0.3 percent in the second quarter of this year, the latest forecast sets France on course for a recession, defined as two quarters running of contraction.
The Bank of France said in a statement on Tuesday that if the economy does contract by 0.1 percent as it expects in the third quarter, the growth assured for the whole year, provided there is no further contraction, would be 0.9 percent.
On Wednesday, the International Monetary Fund revised down sharply its forecast for growth of French gross domestic product to 0.8 percent for the year.
Finance Minister Christine Lagarde has put growth for 2008 at about 1.0 percent.
The central bank also published its monthly index of industrial confidence which slumped to 87 in September from 94 in August.
The survey, carried out before the worst of the global financial crisis in the last two weeks, showed that industrial activity had slowed down markedly in September and the flow of new orders placed, both from inside France and abroad, had fallen.
Total orders in the books were lower than usual, stocks of finished goods had increased and were higher than desired, the industrialists said.
They forecast a continued slowing of activity in the short term.
Date created : 2008-10-14