PARIS - THE French economy will shrink 0.7 percent in the fourth quarter of the year, the central bank predicted Friday, leaving the country's annual growth figure at only 0.8 per cent.

The forecast came as the bank announced that France's seasonally adjusted current account deficit widened to five billion euros (S$9.8 billion) in October from 4.2 billion euros in September.

France has so far avoided slipping into the recession that has gripped many other European economies and the government is still predicting slight growth next year, but the latest figures will increase fears over jobs.

According to the central bank, France's industrial confidence index tumbled 10 points to 68 in November, amid falling demand and plant closures, especially in the country's key motor manufacturing sector. -- AFP