The French economy will grow only 0.4 per cent in 2012, the INSEE national statistics institute said on Tuesday, slightly less than the 0.5 per cent previously forecast and budgeted by the government.

INSEE said the French economy, which grew by 1.7 per cent last year, will post near zero growth in the first two quarters of this year before growing 0.1 per cent in the third quarter and 0.2 per cent in the fourth.

"France will suffer from a contraction in internal demand from its eurozone partners, which will hurt exports, and its efforts to consolidate its budget," said INSEE's research director Eric Dubois.

Given the poor economic context, INSEE also forecast that French unemployment would rise from 9.3 per cent of mainland France's active population at the end 2011 to 9.9 per cent by the end of 2012.

This number jumped to 10.3 per cent when France's overseas territories was taken into account.

INSEE said household demand would inch upwards by 0.2 per cent in 2012, the same increase as last year, with consumers absorbing a 0.6 per cent drop in overall purchasing power forecast for the year.

The Bank of France last week cut its estimate for French growth, saying the eurozone's second-biggest economy would now likely contract by 0.1 per cent in the second quarter.

President Francois Hollande promised during his election campaign to reduce public debt based on a forecast of 0.5 per cent growth this year and 1.7 per cent in 2013.

France's labour ministry said Tuesday that number of registered French job seekers jumped by 1.2 per cent over the month to hit 2.92 million people in May, the 13th consecutive month the country's unemployment line increased.

channelnewsasia.com