French economy takes unexpected dip

The French economy contracted unexpectedly in the third quarter of the year, official figures showed Wednesday. The drop comes after an equally unexpected rise in the second quarter.

French Finance Minister Pierre Moscovici
French Finance Minister Pierre Moscovici Reuters/Robert Pratta

"This is not a recession. It is not an indication of decline," was Finance Minister Pierre Moscovici response on hearing the news that France's GDP contracted 0.5 per cent between July and September.

Dossier: Eurozone in crisis

The fall was due to a 0.6 per cent drop in business investment and a 1.5 per cent fall in exports, according to national statistics institute Insee.

During the second quarter France pulled out of recession with 0.5 per cent growth but, despite hopes that the fragile improvement would continue, it failed to keep up the momentum.

France is the eurozone's second largest economy.

The European Union has launched a review of the export surplus of the strongest economy, Germany, after criticism that it penalised its European partners.

The growth figures are more bad news for French President François Hollande, faced with protests about taxation and other government measures.

His popularity has fallen again to a record 15 per cent in an opinion poll published Thursday.

In one piece of good news for consumers, inflation in France fell in October to 0.6 per cent, compared to 0.9 per cent in September, its lowest level since 2009.

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