France's Lagarde cuts outlook for 2009 GDP growth

PARIS - France slashed its forecast for economic growth next year, as Finance Minister Christine Lagarde on Thursday told lawmakers the economy could stagnate because of the global financial crisis.

The government now expects gross domestic product to increase between 0.2 and 0.5 percent next year, compared to its previous forecast of 1 percent growth, Lagarde said during a budget debate in the senate.

Lagarde said the 2009 budget bill, now in parliament, would be amended to take into account the lowered growth forecast. Noting that the forecast was "the lowest ever made by a French government," Lagarde called it "an exceptional forecast for an exceptional situation."

The new forecast brings the French government's outlook more closely in line with that of the European Commission, which earlier this week said the euro zone's largest members — Germany, France and Italy — will come to a standstill or shrink next year as a deeper credit crunch is expected to brake the economy, strain government finances and put a near-freeze on household spending.

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