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French economy shrinks
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February 22, 2002: 4:07 a.m. ET
GDP slipped to minus 0.1 percent as France succumbs to global slowdown
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LONDON (CNN) - The French economy contracted in the fourth quarter of 2001 as the euro zone's second biggest economy succumbed to an economic slowdown.
Friday's economic data comes two months before the French go to the polls. Socialist Prime Minister Lionel Jospin is challenging President Jacques Chirac in April elections.
Jospin, who has told the electorate to judge him by his economic record, will be banking on an economic recovery before the run-off against Chirac in April and May.
France's gross domestic product slipped to minus 0.1 percent from the third quarter for which the figure was unchanged at 0.5 percent, the French statistics offices INSEE said on Friday.
Economists polled by Reuters had expected the economy to at best remain flat.
But a recession in the U.S., Japan and Germany, France's biggest trading partner, is eroding consumer confidence as unemployment rises. The growth rate for last year was 2 percent, down from 3.6 percent in 2000, said INSEE.
Finance Minister Laurent Fabius had predicted growth might fall in 2001 as fallout from the September 11 attacks rippled through global economies. Fabius expects growth for 2002 in the range of 1.4 percent to 1.6 percent, down from the previous target of 2.25 percent to 2.5 percent.
However, the European Central Bank, which sets monetary policy for the 12-nation euro zone, has said the economy is set for a rebound this year and interest rates were at appropriate levels.
The central bank has been criticised by industrialists and economists for not doing enough to boost growth, the ECB can cut interest rates to stimulate growth. Eurozone interest rates are currently at 3.25 percent.
European Union finance ministers meeting in Brussels last month agreed that there were signs of a rebound.
"We're all aware that we are starting the year 2002 in an economic context characterised by a strong and intense slowdown in both the world economy and the European economy," said Spanish Economy Minister Rodrigo Rato.
"We are convinced that unambiguous signs of economic recovery...are already appearing." 
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