France enters recession in first quarter

France entered a recession in the first quarter this year with gross domestic product contracting 0.2 percent, after shrinking the same amount in the last quarter of 2012, the official INSEE statistics office said Wednesday.

A recession corresponds to a drop in growth over two quarters.

The news is further trouble for President Francois Hollande after unemployment hit a 16-year high earlier this year.

Hollande's government is struggling to tackle the country's economic woes, with the president recording the lowest approval ratings of any modern French president.

Finance Minister Pierre Moscovici said a tiny expansion of 0.1 percent was still expected for 2013 and maintained the government's promise of reversing the rise in unemployment by the end of the year.

He said the recession was "not a surprise" and was "largely due to the environment in the eurozone".

A government source told AFP a return to moderate growth was expected in the second quarter thanks to "the European context and measures taken by France".

INSEE also revised lower the fall in household consumption in 2012 to 0.9 percent instead of a 0.4 percent fall forecast in March -- the most significant drop in the last 30 years.

The fall was mainly linked to a seven percent drop in automobile purchases and a 1.5 percent drop in spending on hotels and restaurants.

Household consumption, a key driver of the economy, was down 0.1 percent in the first quarter after stagnating in the last quarter of 2012.

Exports were also down five percent the first quarter, another reason cited by INSEE for the slide into recession.

The recession was not however on the scale the one in 2009, when France's economy contracted by 3.1 percent.

Hollande is due to meet European Commission chief Jose Manuel Barroso later Wednesday to seek more time to meet EU public deficit targets that have been undermined by the stalling economy.

In a report on 2012 as a whole, INSEE confirmed its estimate of zero growth overall for the year. It also said inflation stood at 1.9 percent in 2012, compared with 2.1 percent in 2011.