French economy to expand 1.9 percent in 2012: IMF

10:39, July 28, 2011      

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The growth pace of the French economy is projected to slow in 2012 to 1.9 percent from 2.1 percent this year, the International Monetary Fund (IMF) said on Wednesday.

Supportive policies and reforms contributed to a gradual recovery of the second largest euro area economy from the crisis, but the unsettled external environment continues to pose risks, especially related to possible spillovers from the euro area crisis, the IMF said in a staff report for the 2011 Article IV Consultation released on Wednesday.

Current growth prospects allowed only for a gradual reduction in the high unemployment rate, while the main challenges for French policy makers are to strengthen the recovery and reduce unemployment rate while safeguarding financial sector stability, noted the report.

The Washington-based global lender urged the nation to step up efforts on fiscal consolidation to reduce the public debt in a " sustainable manner".

The French authorities should adopt regulatory reform to improve the resilience of the financial sector and vigilance on housing market developments, according to the annual IMF financial and economic checkup of the nation.

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