France enters its second recession since 2012
May 15, 2013
The French economy slipped into a double-dip recession during the first quarter of 2013, becoming the 9th eurozone nation to do so, reports USA Today.
Gross domestic product (GDP) declined by 0.2 percent during the first three months of the year, following a 0.2 percent decline during the last quarter of 2012, according to the national statistics agency. Two consecutive quarters of economic contraction indicate an economy in recession. This is France's second since early 2012.
Weakness in France may mean tougher economic times in the EU
The European Union's (EU) second largest economic difficulties are rooted in high government spending, companies that are increasingly less competitive on the world stage and an extremely weak labor market. Growth in France has been slow over the last two years and unemployment has remained high at 10.6 percent, reports The Washington Post.
"We are in Europe, the eurozone countries are our main clients and our main suppliers, and when the environment around us is depressed, well, that's the main factor in the slowing of the French economy," French Finance Minister Pierre Moscovici, told the Post.
Eurozone growth on the whole fell during the first quarter of 2013 by 0.2 percent, which is an improvement over the 0.6 percent declines noted during the last three months of 2012, though still indicative of a recession. Difficulties in France will likely exacerbate problems throughout the EU as the nation is a major market for many of its neighbors.
The depressing economic figures release coincided with the anniversary of French President Francois Hollande's swearing in. Hollande was in Brussels when the news about his nation's stalled economy was announced. The president was in Brussels asking EU finance ministers to grant France two extra years to reduce its national budget deficit to 3 percent of GDP. He offered a package of financial reforms in return for the extension, though it is unknown go far enough to appease austerity minded ministers, reports the Los Angeles Times.
German numbers also weak
Germany, the largest economy in the eurozone, avoided recession during the first quarter of 2011 with 0.1 percent growth that was mostly fueled by consumer spending. German growth contracted by 0.6 percent at the end of 2012. Officials have blamed an usually harsh winter for depressing the slow down, noting that construction was particularly hard-hit.
Although the German economy technically avoided recession, first quarter growth was below analyst predictions and taken as further evidence of European economic weakness.
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