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France seen dodging recession — central bank

France’s central bank said on Friday it expected the eurozone’s second-biggest economy to grow 0.1% in the first quarter of 2013, a more upbeat prediction than those of many economists who see the country slipping into recession. Opulentus France"Forecasts point towards a modest rise in (industrial) activity in February," the Bank of France said in a monthly report, adding that the services sector was also likely to see an upturn. The Bank of France’s estimate was its first forecast for the period and could still be revised in subsequent monthly surveys. Economists are more pessimistic after recent weak data, including a January survey of purchasing managers, which showed the sharpest fall in manufacturing output since March 2009, contrasting with data for the wider eurozone, which showed the bloc had turned a corner. The Bank of France’s business confidence indicator for industry, however, rose to the highest since March 2012. The reading for services was stable, albeit at a low level. Economists in a recent Reuters poll forecast the French economy would shrink by 0.2% in the fourth quarter of 2012 and contract 0.1% in the first quarter of this year, pushing it into recession — defined as two consecutive quarters of falling output. Initial figures for fourth quarter gross domestic product (GDP) are out on February 14. Even if France manages to skirt a recession, the Bank of France’s forecast is still modest, meaning the country will need to pick up momentum if it is to meet the government’s official forecast for 0.8% growth this year. Most economists see a rate closer to zero, casting doubts over the country’s ability to meet its target of cutting its budget deficit to 3.0% of GDP by the end of this year. Separate data released on Friday confirmed the central government deficit, which makes up the bulk of the budget deficit, stood at €87.2bn for 2012, exceeding the official target for €86.2bn. Meanwhile, analysts polled by Reuters see the deficit at 3.6% of GDP at the end of 2013, above the European Union’s (EU’s) official 3% limit and leaving the government with little choice but to implement further austerity or renegotiate its deficit targets with the EU. Source: http://www.bdlive.co.za/world/europe/2013/02/08/france-seen-dodging-recession--central-bank

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