France recession unlikely, says central bank chief
France is unlikely to face a recession next year but its main problem is falling confidence, which has affected investment and consumption, the country's central bank chief said Wednesday.
Bank of France governor Christian Noyer said the growth slowdown was not due to a drop in industrial production, like in 2001 and 2008, but a sense of cautiousness resulting from the eurozone debt crisis.
"We do not see the cause, reason for a recession," he said at a news conference in Singapore after speaking at a forum of financial executives.
"The issue really is confidence," he said.
"When there is turmoil in the markets... there is of course a tendency of households and corporates to postpone some of their investments and consumption decisions," he added. "That's what creates weak growth or stagnation."
Noyer said France did not need another austerity plan because its actions have been sufficient.
"Of course France will have to continue to both consolidate its public finance and clearly to continue on the path towards a balanced budget for us to ensure in the years to come reduction in the debt level," he told reporters.
Budget Minister Valerie Pecresse said in Paris on Tuesday that France was sticking to its economic growth forecast of one percent for next year despite a lower revised projection from the OECD.
She said that 6.0 billion euros ($7.9 billion) worth of "security margins" were in place to deal with "hazards to growth".
The Organisation for Economic Cooperation and Development had slashed its growth forecast for France for next year from 2.1 percent to 0.3 percent.
© 2011 AFP