France to enter recession, 1% growth target hopeful: INSEE

15th December 2011, Comments 0 comments

France will fall into a brief recession and the government's 2012 growth target of 1.0 percent will be difficult to achieve, the official INSEE statistics agency warned Thursday.

INSEE said it expects France to enter a mild recession in the final quarter of this year and the first quarter of 2012.

While timid growth of 0.1 percent is expected to resume in the second quarter, INSEE analysts said gains of 1.3 percent in the second half of the year would be needed to generate the 1.0 percent growth targeted in the government's last austerity budget.

"It is clear that would be difficult," said INSEE's head forecaster, Sandrine Duchene.

She said the latest surveys indicate economic activity is slowing sharply, with gross domestic product expected to contract by 0.2 percent in the final quarter of this year and 0.1 percent in January through March 2012.

A recession is defined as at least two consecutive quarters of negative quarter-on-quarter growth.

France exited a year-long recession in the spring of 2009.

Duchene said INSEE foresees stagnation in the French economy as the primary drivers of the recovery over the past two years, investment and employment, are stalling.

"When you have such a phenomenon, restarting economic growth takes a lot of time," she explained.

INSEE revised down its forecast for economic growth this year to 1.6 percent from the 1.7 percent forecast it made in October. The government expects 1.75 percent growth.

© 2011 AFP

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