The French economy has slipped back into recession, the INSEE statistics agency announced Wednesday, as the eurozone recession entered a sixth quarter — longer than the slump that hit the region during the 2008-2009 financial crisis.
The French economy has fallen back into recession, new data showed Wednesday, as the recession affecting the 17-nation eurozone extended into a sixth quarter — longer than the slump that hit the region during the financial crisis of 2008-2009.
French GDP dropped by 0.2 percent in the first quarter of 2013 following a similar fall in the final quarter of last year, preliminary data from the national statistics agency INSEE said Wednesday. The report cited weak exports and a drop in investment and household spending as factors in the decline.
The EU's official Eurostat statistics agency also announced Wednesday that nine of the 17 eurozone nations are now in recession, with France a notable addition to the list. Overall, the single currency bloc's economy contracted 0.2 percent in the January-March period from the previous three months.
Although it is an improvement on the previous quarter's 0.6 percent decline, the new figures are an unwelcome setback for a region grappling with a debt crisis that has forced governments to slash spending while raising taxes. Austerity measures have inflicted severe economic pain and social unrest, including protests that have brought tens of thousands into the streets across Europe.
New deadline for France
The European Commission on Wednesday gave France a new two-year deadline to reduce its public debt in exchange for an acceleration of economic reforms in talks between European Commission president Jose Manuel Barroso and French President François Hollande.
France will have until the end of 2015 to reduce its public deficit to the allowed limit of three percent of GDP, Barroso said at a news conference following his meeting with the French president.
Barroso said he was “reassured” that Hollande was ready to take on the structural reforms necessary to restore competitiveness to the French economy.
Hollande admitted that he now anticipates "zero growth" in 2013 for Europe’s second-largest economy.
"It is likely that there will be zero growth in 2013," Hollande told the press conference in Brussels, although he expressed hope that a slow recovery was on the way.
"It is my view that we are past the worst," he said.
France’s first recession in four years is more bad news for Hollande’s Socialist government after the number of jobless people hit an all-time high in March.
French growth has faltered as steadily rising unemployment continues to undermine the confidence of both consumers and businesses, which are struggling to cope with government belt-tightening.
INSEE said investment contracted 0.9 percent in the first quarter, with business investment down 0.8 percent, while exports contracted for the second quarter in a row, shrinking by 0.5 percent.
Household consumption dropped by 0.1 percent, contracting for the first time since the second quarter of last year, despite higher spending on energy due to a particularly cold winter.
(FRANCE24 with wires.)
Date created : 2013-05-15