French PM denies recession
Prime Minister Francois Fillon says economic growth may slow down drastically in 2009, denies the country is at the edge of recession.
15 October 2008
PARIS -- France's Prime Minister Francois Fillon warned on Wednesday that the country's economic growth may flag severely in 2009, hitting jobs and spending power, but denied the country faced a recession.
"For the moment, we are getting forecasts for 2009 in the order of 0.2 percent (growth) which is extremely weak," Fillon said on the French radio station RTL.
"It's a breakdown of growth with consequences for jobs, consequences for economic activity and buying power," he said.
The Bank of France on Tuesday downgraded its forecast for French economic growth in the third quarter to minus 0.1 percent from plus 0.1 percent estimated a month ago, signalling a recession.
A recession is defined as two quarters running of contraction in the economy.
The head of the San Francisco branch of the US Federal Reserve, Janet Yellen, said on Tuesday that the US economy "appears to be in a recession".
She said growth was likely to have stalled in the third quarter of 2008 and to contract in the fourth.
Fillon warned: "If America enters a recession, it's clearly very, very bad news for us, because it means all developing countries are going to have a very hard year in 2009."
European nations announced a EUR 1.8 trillion package on Monday to protect financial institutions from the credit crisis that turned chaotic when the major US bank Lehman Brothers collapsed in September.
The French government has offered 360 billion euros' worth of loan guarantees and capital to avert financial collapse in France, the eurozone's second economy.
"We are not immune from a systemic breakdown," Fillon said on Wednesday.
But he added: "France has been less concerned by the bank failures than other European countries, doubtless because French supervision has been more rigorous."
[AFP / Expatica]