Paris - After shrinking by 0.3 per cent in the second quarter of this year, France's economy will continue to contract for the next two quarters, plunging the country into a recession, the government's statistical office Insee said on Friday.

According to the forecast, France's GDP is to contract by 0.1 per cent in each of the next two quarters. A recession is defined by two consecutive quarters of negative growth.

"If the financial turbulence does not get worse," GDP growth for 2008 will be 0.9 per cent, Insee said in a statement. The French economy grew by 2.1 per cent last year and by 2.4 per cent in 
2006.

As a result, unemployment in France will climb to 7.4 per cent by the end of the year, from the current 7.2 per cent, Insee said. (dpa)