Market chatter about a European recession is increasing but Christian Noyer, governor of the Bank of France, told CNBC on Monday that despite an expected weak fourth quarter, the French and Italian economies are not as bad as it seems.
After Ireland, Portugal and Greece , eyes have turned towards France, Spain and Italy now for signs of weaknesses that would aggravate the current debt crisis. A report in Italian daily newspaper La Stampa that the International Monetary Fund was preparing a bailout for Italyboosted investors' hopes.
Noyer declined to comment on the report but said Italy has the ability to recover by itself. An IMF spokesperson denied that the Fund was in talks with Italian authorities on a bailout plan.
Consumers and businesses' confidence is key for the economy, Noyer said.
“We know that the fourth quarter will be weaker for a variety of reasons,” he said, “but essentially the reduction in the confidence level.”
However, Noyer added, the situation is not as bad as it was three years ago, at the height of the 2008 crisis.
“On the other hand, we do not see at all the kind of drop in production that we saw in the fall of 2008,” he said, pointing out that the industry is indeed one of the factors that could actually keep Italy's head above the water.
“When you consider for instance that this country has a primary surplus—which is very seldom among advanced economies today—, Italy has a strong industrial base and I don’t think its competitiveness in economic terms is really that bad,” Noyer said.
France is not as bad as markets may think either, according to the country’s central banker, or at least it is not any worse than any other region in the world.
“We live in a high uncertainty,” he admitted, but he also added that “that’s not only true for Europe, it’s true for the entire world.”
Noyer also said he is not afraid that France may lose its AAA credit rating, as the country managed to undertake strong budget reforms and keep strong fundamentals.
“I see absolutely nothing in the fundamentals of France that would warrant a significant change in the external assessment of its economy… and the state of its public finance,” he said.