France slides towards recession

The risk, economists say, is that it cannot do both.

GDP stopped growing in the last quarter of 2011 and stayed at zero in the first and second quarters, according to the most recent official estimates available.

Economists polled by Reuters are on average predicting zero growth again in the third quarter when official estimates for that period are published on November 15.

The statistics office reported a poor finish to that quarter on Friday, with overall industrial output dropping a hefty 2.7 percent in September after a 1.9 percent rise in August.

In the manufacturing sector alone, output fell 3.2 percent in September, after August's 2.1 percent rise, the statistics office, INSEE, said.

That may suggest the Bank of France's gloomy forecasts for the end of the year are closer to reality than French Finance Minister Pierre Moscovici, who recently said he expected the economy to grow slightly in the third quarter of 2012, while INSEE predicts zero growth.

Bank of France chief Christian Noyer, speaking in regional media interviews before Friday's statement from the central bank, said the government was right to target a deficit of three percent in 2013 and that he was confident.

It's a mark of French economic credibility, Noyer told Vosges Matin and other eastern French newspapers. Growth will recover gradually during the course of 2013 if we can restore confidence in Europe and France, he said.

While the government predicts

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