Frances economy could shrink by 1 percent in the first quarter, drawing into question government forecasts for 2009, a French newspaper said on Wednesday, citing a source close to Economy Minister Christine Lagarde. The French government expects the economy to contract by 1.5 percent this year, having sharply cut its previous official forecast of 0.2-0.5 percent growth.
Lagarde confirmed that new forecast earlier this month. But newspaper Le Figaro said worse-than-expected industrial output figures for January could change those estimates. "Our expectations for a 1.5 percent decrease this year were based on an estimate of a 0.4 percent contraction in the first quarter," the source was quoted as saying.
"Given the sharp fall in industrial production in January, we dont exclude that there will be a contraction of 1 percent in the first quarter." French industrial output fell by 3.1 percent in January compared with December. Asked about the Figaro article, the economy ministry said only that it declined to confirm the numbers and stressed uncertainties surrounding forecasts given the current economic crisis.