Euro woes deepen: France, Italy shrink | business | Hindustan Times
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Euro woes deepen: France, Italy shrink

France’s economy is set to contract by 0.1% in the third quarter, while Italy’s economy shrank by 0.8% in the second quarter, official figures showed on Monday, confirming further trouble for Europe’s economy.

business Updated: Sep 10, 2012 22:49 IST

France’s economy is set to contract by 0.1% in the third quarter, while Italy’s economy shrank by 0.8% in the second quarter, official figures showed on Monday, confirming further trouble for Europe’s economy.

The contraction in quarterly growth would be France’s first since it came out of recession in 2009 and follows zero growth for the past three quarters.

If that quarterly contraction is confirmed and followed by another it would signal the Europe’s second-biggest economy has entered a recession, which is commonly defined by economists as two consecutive quarters of contracting activity.

French President Francois Hollande said he expected economic growth to be “barely above zero” for 2012. The government has forecast 0.3% growth for the year.

Meanwhile, Italy’s economy shrank by 0.8% in the second quarter, official figures showed on Monday, as the recession-hit country struggled to pull itself out of a slump despite a government growth plan.

Italy’s gross domestic product (GDP) was down 2.6% from a year earlier, the National Statistics Institute (ISTAT) said.

Italy’s economy has been shrinking since the third quarter of 2011.

The Italian economy has been hit by a series of draconian austerity plans and a rise in unemployment to over 10%, and the euro zone’s third largest economy is considered one of the countries most at risk for contagion from the debt-crisis.