PARIS (MNI) – France will manage to skirt a Eurozone recession in
the second half of the year, but its economy will stagnate and
unemployment will continue to rise, the French national statistics
institute Insee said on Thursday.

In its quarterly economic outlook report, Insee said that the
French economy will register no growth at all in the third and fourth
quarters, while the Eurozone economy will contract by 0.2% and 0.1%,
respectively, in the same two periods.

“The French economy is likely to remain at a standstill,” Insee
said. It predicted France’s exports would be hurt by the slowdown in
world trade and household consumption penalized by higher taxes, the
rise in oil prices and a steady increase in unemployment.

Job losses in France should total 67,000 in the second half of the
year, with the unemployment rate rising to 10.6% at year-end from 10.2%
at the end of the second quarter, Insee said.

The forecasts could be affected by several factors both positive
and negative, Insee said. If the economies of China and Brazil respond
more sharply than expected to the extensive monetary easing measures in
both countries, French exports could contribute more to growth, Insee
said. On the domestic side, if French households do not draw on their
savings enough to compensate for declining incomes, personal spending
could weaken rather than remain stable, it said.

Household consumption will be essentially flat in the second half
of the year, rising 0.1% in the third quarter and falling 0.1% in the
final three months of the year, Insee projected. Exports, meanwhile, are
expected to fall 0.3% in the third quarter and rise by 0.2% in the
fourth, it said.

For all of 2012, France is likely to post growth of only 0.2%, down
from 1.7% in 2011, Insee said. According to the French government, which
released its 2013 budget last week, growth is expected to rebound to
0.8% in 2013 and 2.0% in 2014 from 0.3% this year

For the Eurozone economy, deep recessions in southern countries
caused largely by austerity measures will drag the 17-nation currency
bloc into the red in the second half of the year, Insee said.

Germany will post slightly positive growth in the second half, but
its exports will also be hurt by the slowdown in global trade. Spain’s
economy, is set to contract by 0.6% in the third quarter and 0.8% in the
fourth, while the Italian economy should decline by 0.4% in each
quarter, the institute said.

“Divergences within the Eurozone are set to widen in H2,” Insee

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