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WORLD> Europe
French minister open to more stimulus, if need be
(Agencies)
Updated: 2008-12-19 23:25

PARIS -- The French finance minister said Friday she would consider more economic stimulus measures after the national statistics agency predicted the economy will sink into recession early next year. 

France's Economy Minister Christine Lagarde arrives at a news conference in Paris December 18, 2008. The French finance minister said Friday she would consider more economic stimulus measures after the national statistics agency predicted the economy will sink into recession early next year. [Agencies]

Christine Lagarde said she's sticking to the Cabinet's projection of razor-thin growth next year, despite the forecast by statistics agency Insee that the economy will shrink in both the fourth quarter of 2008 and first quarter of 2009.

Lagarde said she's waiting to evaluate recent indications of a "very strong and very brutal degradation" of the economy, as well as the impact of a planned euro26 billion ($38 billion) stimulus package to boost construction and help small companies.

"We will do what we have to do," Lagarde said after the Cabinet approved the stimulus plan Friday, sending it on to parliament. "If we have to do more, we will do more."

Insee predicted Friday that France will follow the likes of Germany, the US and Japan into recession early next year as rising unemployment and the fallout of the global financial crisis prove too much for the No. 2 eurozone economy.

In its twice-yearly economic outlook, Insee forecast the economy will shrink by a worse-than-expected 0.8 percent in the fourth quarter, and by another 0.4 percent in the first quarter of 2009, two consecutive quarters of economic decline being a common definition of recession.

The Cabinet has been tabling on growth of between 0.2 percent and 0.5 percent for all of next year.

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