French economic growth will be below forecast in 2008 but the economy is not in recession, budget minister Eric Woerth said today.
"Growth is well below what was expected but at the same time there is a world that is slowing down," he told Europe 1 radio. However, he did not announce a change in the official forecast.
"There is no recession...In 2008, gross domestic product will grow," he said.
French national statistics office INSEE reported earlier this month that the economy contracted by 0.3 per cent in the second quarter, stoking fears of a recession in the euro zone's second biggest economy.
Economy minister Christine Lagarde, who said this month that France should not expect good third quarter growth, is widely expected to announce a cut to the forecast range of 1.7-2.0 per cent growth in 2008.
But Mr Woerth declined to offer an indication before the government prepares the 2009 budget at the end of September.
He noted that the growth slowdown had already affected public finances and said the government would continue efforts to control spending.
"I said in June or July there would be between €3 and €5 billion less in tax receipts than forecast. We will adapt to that," he said.
He said the government would probably cancel between €2-3 billion out of a €7 billion budget cushion built into the budget to take care of unexpected spending needs, spreading the impact across all ministries.
Reuters