- Pierre-Olivier Beffy, chief economist at Exane BNP Paribas
The industrial output in Europe's second largest economy fell significantly in the beginning of 2013, adding to fears that French economy teetered on the brink of its third recession in four years. Output from factories, mines, utilities and the construction industry tumbled 1.2% from December, when it expanded by 0.9%, posting the sharpest decline since September. At the same time, car making dropped by 13.5% in January, following a revised 8.8% gain in December. The drop underlines the slowdown in the economy at the start of the year. However, factory managers have reported improved orders, due to the improving global demand, even despite President Francois Hollande's budget cuts, which weighed on domestic spending. After shrinking 0.3% in the final quarter of 2012, French economy is expected to contract by 0.1% in the first three months of this year, falling into a technical recession, which is defined by two consecutive quarters of negative growth.
"Business surveys suggest a contraction in January," said Pierre-Olivier Beffy, chief economist at Exane BNP Paribas in London. "The rebound in export orders gives a ray of hope for the spring."
"The weak report is consistent with France's depressed business confidence surveys," said Helene Baudchon, economist at BNP Paribas.
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