PARIS—The French economy is set to post zero growth in the first half of 2012, Bank of France data showed Thursday, a sharp reminder for president-elect François Hollande of the tough challenge awaiting him when he takes over the reins of the euro zone's second-largest economy.A monthly survey showed the Bank of France's industry sentiment indicator for April at 95 and services sentiment measure at 93, both unchanged from March and below the longer-term average of 100.
"According to the monthly index of business activity, gross domestic product is expected to remain stable in the second quarter," the Bank of France said.
Separate data from government statistics bureau Insee underscored the economy's weakness, showing manufacturing production fell 0.5% in the first quarter from the last three months of 2011.
Budget ministry data revealed that while the government's deficit at the end of March was €29.4 billion ($38 billion) compared with €33.6 billion a year earlier, but the figure was supported by special items, chiefly the sale of mobile communications licenses. Furthermore, spending growth was up €4.9 billion compared with the first three months of 2011, while tax receipts only rose by €3 billion.
Mr. Hollande, the first socialist president in 17 years, campaigned on a pledge to reshape European policy away from austerity toward growth. That same sentiment has increasingly been echoed across the euro zone. Greek elections held Sunday were inconclusive, leaving the country with no single party or coalition able to form a government. The impasse demonstrated a rejection of the austerity program put in place as a condition for an international bailout, and calls into question Greece's place in the euro.
Mr. Hollande faces a conflict with German Chancellor Angela Merkel, who has signalled she won't accept any change to the so-called Fiscal Compact that binds countries to greater discipline. But Mr. Hollande, who will travel to Berlin to meet Ms. Merkel shortly after his inauguration Tuesday, has shown no signs of backing down.
"The goal is to profoundly change what we have now so that the European policy is itself profoundly changed," said Michel Sapin, an economic advisor to Mr. Hollande, in a radio interview.
The economic slowdown is exacting a toll on French companies.
Media-to-defense conglomerate Lagardere MMB.FR +2.19% SCA Thursday reported a 12.5% decline in first-quarter revenue compared with a year earlier. The company said an uncertain backdrop in Europe weighed on consumer spending and the advertising market.
The chief executive of French mutual lender Groupe BPCE painted a grim outlook for the single currency and said demand for loans is slowing in France.
"The euro zone is going through a zone of turbulence that is long term," François Pérol said on BFM radio. "The two to three years to come for the euro zone will be difficult."
No comments:
Post a Comment