France’s Economy May Shrink in 2009, Finance Chief Lagarde Says
French Finance Minister Christine Lagarde said the government will revise its economic forecast to project a contraction this year as another jump in unemployment provided the latest sign the country is sinking into a recession.
“I would be very surprised if we have positive growth” in 2009, Lagarde told reporters today on her way to Lyon, France. She said she would publish updated forecasts in “mid-February” after getting figures on fourth-quarter gross domestic product.
The French economy, Europe’s third-largest, may have contracted 0.8 percent in the fourth quarter, the most since 1974, and may slip into a recession early this year, according to the Paris-based national statistics office, Insee. The government currently forecasts 2009 economic growth of 0.2 percent to 0.5 percent and Prime Minister Francois Fillon told Le Monde daily today that he will cut that outlook, taking into account the “evolution of the situation in the U.S.”
The European Union expects the French economy to shrink 1.8 percent this year, which would be the worst performance since World War II. The recession will push the unemployment rate to 9.8 percent this year and 10 credit score.6 percent next year, according to the EU forecasts.
Lagarde said today that the number of jobseekers in France rose by about 45,000 in December. This represents a 2.2 percent increase, to 2.11 million at the end of the month. France had about 216,000 more jobseekers in 2008 than the previous year. The December increase comes after a 64,000 jump in November, the biggest on record.
‘Big Minus’
The nation’s economic performance in the fourth quarter was a “big, big minus,” Lagarde said on France 2 television earlier today without giving any figures. She wouldn’t make a growth forecast for this year. “The forecasters themselves are so uncertain,” she said.
“The scale and the synchronization of the slowdown worldwide have created a climate that erodes confidence and companies are on alert,” said Laurence Boone, chief French economist at Barclays Capital in Paris. “If the job market continues to deteriorate, there are chances consumer spending will suffer.”