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France narrowly escaped recession in third quarter

Latest update : 2008-12-29

Official figures confirmed initial estimates that France's economy grew by 0.1% in the third quarter of 2008, allowing it to narrowly escape recession. But the respite is only temporary since GDP is expected to shrink by 0.8% in the fourth quarter.

AFP - The latest growth estimate by France's state statistics institute confirmed Monday that the country has defied predictions and narrowly avoided falling into recession.

The economy grew 0.1 percent in the third quarter, thereby avoiding recession after a contraction of 0.3 percent in the second quarter, said a second estimate by INSEE that confirmed initial figures given in November.

INSEE had initially predicted a fall of 0.1 percent in gross domestic product (GDP) in the third quarter. A recession is defined as two quarters of negative growth.

Nevertheless, the institute predicted on December 19 in its official economic forecast that France will fall into recession next year for the first time since 1993 and faces a steep rise in unemployment.

After the 0.1 percent growth in the third quarter of this year, it estimated that the French economy will shrink by 0.8 percent in this quarter and will contract again by 0.4 percent in the first quarter of 2009.

The agency hopes for a slow recovery after that but GDP could still decline by 0.1 percent in the second quarter -- marking a nine month long contraction -- and 2009 as a whole could still see negative growth.

The government has, however, stuck with its forecast of a slender expansion in 2009 of 0.2 to 0.5 percent.

Date created : 2008-12-29