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OECD Economic Surveys: France 2009

image of OECD Economic Surveys: France 2009

The French economy has not escaped the severe recession gripping all developed countries, but it should be less deep than elsewhere due to powerful automatic stabilisers. Nevertheless, the crisis will leave public finances in a serious condition. This 2009 edition of OECD's periodic survey of the French economy includes chapters covering coping with recession, labour market reforms, restoring French competitiveness, and strengthening competition.

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Assessment and recommendations

Like other industrialised countries, France is facing the deepest economic recession of the post-war period. After the severe contraction recorded in the last quarter of 2008, activity seems to have slowed further in early 2009. Yet with financial-market turbulence a persistent threat and the risk of an even larger shrinkage in world trade, there is great uncertainty as to the timing and strength of the recovery. In any case, the decline in economic activity is likely to be very significant, even if less pronounced than elsewhere, with some likelihood of a gradual easing of the recession over the course of the year, supported by budgetary stimulus and interest-rate reductions in France and abroad. The resulting job losses are set to drive the unemployment rate steadily higher throughout the year; at the same time, the inflation rate will probably approach zero.

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