November 15, 2012
(AP) France's economy narrowly avoided a recession, growing slightly in the third quarter, according to official statistic released Thursday.
The French economy hasn't recorded growth since the third quarter of last year and had been widely expected to start its slide into recession in the third quarter technically defined as two consecutive quarters of negative gross domestic product. Instead, Insee, the national statistics agency, said GDP rose 0.2 percent on an annualized basis in the July-to-September period.
But the agency also revised down figures for the second quarter, saying the economy shrank 0.1 percent then. It had previously said growth was stagnant, as it had been for the previous two quarters.
Fixing France's economy amid a European-wide crisis is President Francois Hollande's biggest challenge. He has promised to rein in massive government spending and reduce the deficit, largely by raising taxes.
But those measures have put a stranglehold on growth, and the country has watched unemployment tick steadily up as a raft of companies announced layoffs in recent months. The jobless rate now stands at 10.8 percent, according to European statistics.
Hollande has promised to restore the country's competitiveness by offering a tax break to companies that kicks in next year, but many are still waiting to see how he will reform the country's stringent labor rules. Those rules make firing difficult and thus make employers reluctant to hire, even once the economy starts growing.