Bank of France cuts Q2 growth forecast to minus 0.1%

The Bank of France cut Friday its second-quarter growth estimate for the eurozone's second biggest economy, and now expects it to contract by 0.1 percent. The central bank had previously expected growth to be essentially unchanged in the three months from April through June. If the figures are confirmed it would be the first contraction since France pulled out of recession in 2009. On May 15, the official statistics agency INSEE said the French economy had stalled in the first quarter of 2012. In addition to recording zero growth in the first three months of the year, INSEE revised its fourth quarter 2011 growth figure down to 0.1 percent from 0.2 percent, but maintained that output had expanded by 1.7 percent in 2011. Meanwhile, French unemployment continued to rise in the first quarter of 2012, hitting the symbolic level of 10 percent, up by 2 percent from the previous three-month period INSEE said Thursday. The rate, based on International Labour Organization standards, was also up 0.4 percent from the first quarter of 2011. The European Commission has forecast overall growth this year of 0.5 percent in France, in line with budget predictions by the new French President Francois Hollande. But the Commission expects growth next year of only 1.3 percent, against a forecast of 1.7 percent under Hollande's economic programme.