French Economy to Begin Recovery in First Half, Insee Predicts

France’s economy will begin a “slight” recovery in the first half of next year after shrinking in the final quarter of 2012, national statistics office Insee predicted.

Europe’s second-largest economy will probably shrink 0.2 percent in the three months through December, before advancing 0.1 percent in each of the next two quarters, Insee said in its latest set of forecasts.

The prediction shows France’s economy is barely growing at a time when President Francois Hollande is seeking to improve the competitiveness of the nation’s industry and reduce the budget deficit. In the months ahead, growth will rely on demand holding up from both consumers and foreigners, Insee said.

“Demand should be sustained in the first half of 2013, meaning the economy should advance, slightly,” Insee said. “Exports should accelerate a bit, helped by the global recovery and the past depreciation of the euro.”

With companies such as PSA Peugeot Citroen slashing thousands of jobs, unemployment will continue to climb, Insee said. The statistics office predicts that non-farm payrolls will shrink by 80,000 in the first half, driving up the unemployment rate to 10.9 percent.

“The high level of unemployment and weak capacity utilization will slow inflationary pressure,” Insee said.

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