French Economy set to Contract for first time since 2009 this qtr.
French Economy a Problem for the President
46 minutes ago
By WILLIAM HOROBIN
And GABRIELE PARUSSINI
PARIS—The French government is in the process of revising its economic growth forecasts for next year after a weak start to 2012, underscoring the challenges for President François Hollande as he seeks to control debt and deficit levels while delivering on a promise to foster growth domestically and in Europe.
"We are in the process of adjusting the forecasts for next year," Finance Minister Pierre Moscovici said on French radio station Europe 1. He referred to a Bank of France survey last week that showed the French economy is set to contract in the second quarter for the first time since 2009.
Slower economic growth would increase pressure on Mr. Hollande to deliver on France's budget commitments. Mr. Hollande, who has been in office less than a month, has promised to cut the budget deficit to 3% of gross domestic product next year and to balance public finances by the end of his mandate in 2017. His program is based on a growth forecast of 0.5% this year and 1.7% in 2013.
Investors are paying close attention to France, seen as the latest bulwark in the euro zone against a deepening sovereign debt crisis that is putting the existence of the common currency at risk. In Europe, Mr. Hollande has led the charge against Germany-backed austerity, in a bid to live up to election pledges and renegotiate the fiscal treaty to complete it with growth-boosting measures.
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