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French economy to shrink 3 percent

French economy to shrink 3 percent article image

Economists in France have revised their forecasts and now say that their economy will shrink by three percent - twice the size of the contraction they originally predicted. Recovery will now come in 2010 with slow growth of 0.5 percent, which is half the rate of initial government forecasts. According to Agence France-Presse, a source close to Economy Minister Christine Lagarde called it a "prudent outlook" and pointed to household consumption, the mainstay of the French economy, as an area that should remain steady, allowing growth to occur. Economic activity should pick up at the beginning of 2010 following support policies implemented by central banks and governments. The unemployment rate is also under scrutiny after a jump of 1.1 percent to 8.7 percent in the first quarter this year. The government expects this rate to worsen but show signs of improvement some time in 2010.

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