Following on from yesterday’s news that the International Monetary Fund cut Germany’s growth forecast comes more bad news for the Eurozone. This time the IMF has turned its attention to France and it isn’t impressed.
The IMF downgraded its forecasts for 2013 and 2014 for the French economy, raising fears that the Eurocrisis has seeped into the heart of the Eurozone. The regions second largest economy fell into recession in the first quarter of the year and looks set to slide even deeper over the next year as joblessness rises and as confidence falls.
According to the IMF, France’s GDP will contract by 0.2% in 2013 and grow by 0.8% next year, figures that down from its previous expectations that French GDP would rise by 0.1% contraction in 2013 and a rise of 0.9% next year. So far the French government has not updated its own forecasts for growth which stands at 0.2% for 2013. The European Commission meanwhile is predicting a contraction of 0.1%
“Following two quarters of negative growth (last quarter of 2012 and first quarter of 2013), economic activity should begin to recover in the second half of 2013, driven by a gradual improvement in the external environment” it said.
But it warned there were still downside risks in the form of precarious growth prospects in Europe, and uncertainty in France on tax policy, “which weighs on spending decisions of households and enterprises.”
It also said “significant rigidities hinder the economy’s capacity to grow and to create jobs.”
The IMF wasn’t all doom and gloom however. The organisation highlighted some positives for the nation’s economy saying that households and firms remained relatively sound and said they could “more easily translate into an increase in demand.”
The European commission also laid into France on Wednesday saying that the county must reform its costly pension system and free up its rigid labour market if it is to put its economy back on track and to stabilise its strained public finances.
Germany saw further signs that its economy is slowing as new car registrations fell sharply in May. According to the Federal Motor Transport Authority 261,316 new cars were registered in May, down 8.1%, its lowest level since February and down 9.9% from the previous year. Mays decline suggests that the moderate rise recorded in April was nothing more than a fluke attributable to two extra working days.
Current Euro (EUR) Exchange Rates
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3055
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8538
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.3518
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6295
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7648
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1700
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7399
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6133
(Correct as of 15:20 pm GMT)