France's economy will grind to a halt in the third quarter as households succumb to the global slowdown and rein in spending, the country's statistics institute said in its quarterly economic forecast. In its first outlook for the second half of the year, Insee said Friday that economic growth will slow to zero in the third quarter before recovering slightly to 0.2 percent in the fourth quarter. It lowered its outlook for the second quarter to a growth clip of 0.2 percent from a March forecast of 0.3 percent. The first quarter saw 0.6 percent growth. For the full year, Insee predicts economic growth will fall short of government forecasts with a pace of 1.6 percent. Budget Minister Eric Woerth on Thursday said he is sticking to his growth forecast of 1.7 to 2 percent. “Until now, France has eluded the global slowdown,” Insee said in its outlook. “But confidence surveys in all sectors now indicate a downturn in business managers' expectations.” The world economic slowdown is eroding order books and limiting manufacturing output to almost zero in coming quarters, Insee said. Household spending, which until recently had been reasonably resilient, is buckling as rising food and energy costs eat into real income, and the real-estate market is experiencing a downturn, the statistics office said.
