PARIS - THE latest growth estimate by France's state statistics institute confirmed on Monday that the country has defied predictions and narrowly avoided falling into recession.
The economy grew 0.1 per cent in the third quarter, thereby avoiding recession after a contraction of 0.3 per cent in the second quarter, said a second estimate by INSEE that confirmed initial figures given in November.
INSEE had initially predicted a fall of 0.1 per cent in gross domestic product (GDP) in the third quarter. A recession is defined as two quarters of negative growth.
Nevertheless, the institute predicted on Dec 19 in its official economic forecast that France will fall into recession next year for the first time since 1993 and faces a steep rise in unemployment.
After the 0.1 per cent growth in the third quarter of this year, it estimated that the French economy will shrink by 0.8 per cent in this quarter and will contract again by 0.4 per cent in the first quarter of 2009.
The agency hopes for a slow recovery after that but GDP could still decline by 0.1 per cent in the second quarter - marking a nine month long contraction - and 2009 as a whole could still see negative growth.
The government has, however, stuck with its forecast of a slender expansion in 2009 of 0.2 to 0.5 per cent. -- AFP
