French Economy to Shrink This Year on Deficit Cuts, IMF Predicts

The French economy will probably shrink this year as President Francois Hollande seeks to cut the budget deficit, confidence remains lackluster and exports flag, the International Monetary Fund predicted.

Gross domestic product will probably decline 0.1 percent in 2013 before expanding 0.9 percent next year, the Washington-based fund said in its World Economic Outlook report.

The forecast compares with the 0.1 percent expansion this year that the European Commission is predicting and underlines the challenge facing Hollande as he tries to revive Europe’s second-largest economy. Finance Minister Pierre Moscovici will publish his department’s latest projections tomorrow.

The IMF’s prediction of an economic contraction reflects “a combination of fiscal consolidation, poor export performance and low confidence,” IMF economist Olivier Blanchard wrote in the report.

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