Paris: The French economy entered recession in the first quarter as manufacturing and exports continued to suffer the impact of the global economic slowdown, the national statistics agency said Friday.
The euro zone’s second largest economy contracted by 1.2% in the first three months of the year compared to the previous quarter and by 1.5% in the fourth quarter of 2008, the INSEE statistics agency said.
Two consecutive quarters of negative economic growth is a common definition of recession.
The French economy is now on track to contract by 3% this year, Finance Minister Christine Lagarde said in a statement following the INSEE report. That’s double the government’s previous forecast of a 1.5% decline this year, and follows the mere 0.3% growth recorded in 2008.
Lagarde said the goverment’s forecasts are now in line with those of international organizations, which forsee a “gradual economic recovery in 2010.”
French manufacturing continued its sharp slowdown in the first quarter, with automobile production down 12.8% on the quarter, the INSEE said. Exports shrank 7.2% while consumer spending growth was stable at 0.2%.