WORLD> Europe
French official sees growth around zero in 2009
(Agencies)
Updated: 2009-01-22 21:28

PARIS -- French economic growth will be "close to zero" this year as the financial crisis takes its toll, the top official for France's economic recovery plan said Thursday. Private economists said even that was too optimistic.

One of Paris's top department stores, Le Printemps. French economic growth will be "close to zero" this year as the financial crisis takes its toll, the top official for France's economic recovery plan said Thursday. [Agencies]

Patrick Devedjian, the recently appointed minister charged with putting in action France's euro26 billion ($33 billion) stimulus plan, said "I am not making forecasts. We don't know how the crisis is going to evolve... but in any case, we're close to zero" growth in 2009.

Related readings:
 French town laced with uncertainty
 French economy grows 0.1% on consumer spending
 French minister open to more stimulus, if need be
 EU gives nod to French bank fund
The government's most recent forecast for 2009 is for economic growth of between 0.2 percent and 0.5 percent, while the European Commission expects the French economy to contract by 1.8 percent this year.

The government's forecast "is definitely too optimistic," said Tullia Bucco, an economist at UniCredit Markets and Investment Banking in Milan. Bucco, who expects French gross domestic product to shrink 1.7 percent this year, said "I understand they (the government) hope that fiscal policy measures will be effective soon, but I don't agree with this. There is no way France can avoid a sharp contraction."

In the interview on French television channel France-2, Devedjian also warned that unemployment in France is likely to worsen in the coming months.

"We saw the figures last month were not good," Devedjian said, "It's likely that we won't have good figures in the months to come."

The unemployment rate in France rose to 7.7 percent in the third quarter of 2008 from 7.6 percent in the second quarter, according to figures released last month.

Since then, the number of job seekers has grown at an accelerating pace, rising 2.4 percent in October and 3.2 percent in November, the fastest month-on-month rise since 1993. At the end of November, more than 2 million people were out of work in France.

The worsening employment outlook is causing consumers, once the motor of France's economy, to pull back, new data also shows. In a statement earlier Thursday, the French statistics agency INSEE said consumer spending on manufactured goods shrank 0.9 percent in December compared to a month earlier, much worse than economists had forecast. That left the annual rate negative for the first time since September, 1997, at minus 1.7 percent.