France's economy falls into recession
France entered into recession in the first quarter of 2013 according to official statistics, with weakened production output, consumption and investment to blame. It’s bad news for President François Hollande, who has struggled to get France’s economy and employment levels back on track, and has the poor approval ratings to prove it.
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According to Insee, France’s national statistics institute, the country’s Gross Domestic Product (GDP) shrank by 0.2 percent in the first quarter, after falling by the same amount in the last quarter of 2012.
A recession is defined by a drop in growth over two quarters.
This is the first time the French economy has seen such drops in GDP since 2009, when the economy contracted by 3.1 percent.
The most significant drop was seen in household consumption, with a revised fall of 0.9 percent, as opposed to the forecasted 0.4 percent drop predicted in March.
The drop was primarily due to a reduction in automobile purchases, down by 7 percent, and a 1.5 percent reduction on hotel and restaurant spending.
Exports were also down by 0.5 in the first quarter.
France’s Finance Minister Pierre Moscovici said, on his way out of a meeting of ministers, that an expansion of 0.1 was expected for 2013.
Moscovici blamed the recession on “the environment in the eurozone” and promised a reversal of unemployment figures by the end of the year.
But he said the recession was not a surprise.
France’s President François Hollande is set to meet European Commission President Jose Manuel Barroso in Brussels late Wednesday, in an attempt to get more time to meet European Union public deficit targets.
France has been promised two more years to get its budget deficit down to 3 percent of economic output, but Barroso said on Wednesday that the extension would only be approved if France pursues necessary reforms in order to regain competitiveness.
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