France's economy doing better than neighbours: minister

By AFP

July 15, 2010 Updated May 6, 2009 at 1:03 PM CDT

France is doing better than its European neighbours when it comes to weathering the economic crisis, Economy Minister Christine Lagarde said Wednesday.

She cited European Commission forecasts showing the French economy would shrink by three percent this year compared to 5.4 percent in Germany.

"The French economic model is clearly resisting better for 2009 than many other countries, neighbours, friends and competitors, which are being hit much harder by the international crisis," Lagarde told a parliament commission.

On a broad range of indicators such as inflation and unemployment, France is faring better than the eurozone average, she argued.

The French government expects the economy to shrink by 2.5 percent this year but is banking on a turnaround in 2010.

French economic activity picked up slightly in April compared to March, suggesting the recession in France was starting to bottom out, the research group Markit said.

It said an index covering the manufacturing and service sectors and compiled by company purchasing managers rose to 43.8 points last month from 40.2 in March.

While the April reading was the highest in six months, it was still well below 50 points, a level that signals an expansion in activity.

Jack Kennedy, a Markit economist, nonetheless said the worst of the recession in France appeared to be over, with growth declines likely to slow during the second quarter.

But he added that demand remained fragile and that lay-offs were showing no sign of easing.

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