France heads back into recession

France is headed back into recession for the second time in three years, its central bank warned Wednesday in a setback for the recovery prospects of the stricken eurozone.

In a downbeat survey of the outlook for Europe's second biggest economy, the Bank of France predicted a 0.1 percent contraction in gross domestic product (GDP) for the third quarter of this year.

If that outcome is confirmed it would follow a similar fall in output for the three months to June and zero growth in the first quarter of 2012.

France is also grappling with a trade deficit running at close to record highs, despite shrinking in the first half of the year.

Imports outstripped exports by 34.9 billion euros ($43.2 billion) in the first half of the year, down from 38.2 billion in the first six months of 2011. Trade Minister Nicole Bricq said the figures reflected a weakening world economy and the crisis in Europe.

But she added: “That said, they also reflect a problem with the competitiveness of our businesses. We need far more businesses and we need much stronger businesses.” The Bank of France's survey followed worse-than-expected data from neighbouring Italy and Germany earlier this week.

AFP