Paris: The International Monetary Fund on Thursday lowered its growth forecast for France this year and warned the country may miss its targets to cut its budget deficit.
The Washington-based body cut its gross domestic product (GDP) growth projection for France this year to 0.7 per cent, down from the 1.0 per cent it had forecast in April.
Unemployment in the Eurozone’s second-biggest economy is predicted to remain high until 2016, while stalling economic growth means France’s public deficit will exceed EU targets to hit 4.0 per cent this year.
“The French economy has shown great resilience during the global financial crisis but the pace of recovery has been slow,” the IMF said in a statement.
It also called for “deeper structural reforms” to help turn around the economy.
President Francois Hollande’s deeply unpopular Socialist government is struggling to boost growth in France’s sluggish economy and stem rising unemployment.
The number of registered unemployed in France has meanwhile suffered a big jump in May, rising by 24,800 to a new record of 3.388 million.
France had been supposed to get its public deficit down to 3.0 per cent of output but won a reprieve from the European Commission, and was aiming for 3.8 per cent in 2014.
National audit body, the Accounting Court, this month warned France’s future growth could be threatened by its growing public deficit, which is expected to hit 4.0 per cent this year.
The government has pledged cuts in planned spending totalling 50 billion euros ($68 billion) by 2017 to restore export competitiveness, boost growth and create jobs.
The IMF said France would have to carry on with these policies noting that there was “little room for deviation”.
Next year it predicted France’s economic growth would rise to 1.4 per cent, accelerating to 1.7 per cent in 2016, 1.8 per cent in 2017 and 1.9 per cent in 2018 and 2019.