The French economy shrank further in the first quarter, bringing the country officially into recession after a fall in the last quarter of 2008. Economy Minister Christine Lagarde said growth data would be "bad".
AFP - The French economy has lost more steam in the first quarter, Economy Minister Christine Lagarde said on Thursday, ahead of the release of growth data which she said would be "bad."
France's gross domestic product shrank by 1.1 percent in the last quarter of 2008 and a second consecutive drop would mean the country has officially entered into recession.
"The first quarter will be bad," Lagarde told Canal+ television.
The economy began to shrink in the last three months of last year and "since then, it hasn't improved," Lagarde said.
The government has been preparing French public opinion to the gloomy outlook even as it argues that France is doing better at weathering the economic crisis than its European neighbours.
The Insee state statistical agency is due to release the growth data for the first quarter on Friday, but in March, it forecast a 1.5-percent contraction for that period.
The Bank of France said on Tuesday it expects the French economy to shrink 0.8 percent in the first quarter and 0.6 percent in the second.
Prime Minister Francois Fillon this month went back to the drawing board and said he expected the economy to contract by 2.5 percent this year, revising his previous estimate of 1.5 percent.
The government is however banking on a turnaround in 2010 and points to bigger GDP drops in Germany and Britain as proof that France's policies are more effective.
In March, the Organisation for Economic Cooperation and Development predicted that French GDP would fall by more than 3.0 percent this year as the effects of the global financial crisis take their toll.
Lagarde also said France must do more to rein in public spending.
"We must absolutely make savings," she said.
Fillon has recently said he will not seek to increase taxes but that the 2010 budget under consideration would contain spending cuts.
Date created : 2009-05-14