IMF Sees France Economic Recovery in 2013 Second Half

Amid persistent uncertainty and weakness of economic indicators, we project that the economic recovery will begin to unfold only in the second half of 2013. Real GDP would contract by 0.2 percent in 2013 and grow by 0.8 percent in 2014, with downside risks weighing on the outlook.

As discussed in last year's report, significant rigidities hinder the economy's capacity to grow and to create jobs. The gap relative to European trading partners in terms of cost and non-cost competitiveness remains a dampening factor and ultimately a risk for macroeconomic balances. The external environment is also changing rapidly with euro area periphery countries registering large competitiveness gains. A powering up of the reforms launched by the government in the last six months (see below) is needed to close this gap. The structural challenge faced by France is captured by three related indicators: a declining rate of productivity growth, low profit margins, and a deteriorating export performance.