IMF warns France needs more reforms to close growing competitiveness gap with neighbours

PARIS – The International Monetary Fund has lowered its growth projections for France and says the country needs more reforms to improve the economy’s competitiveness.

The IMF said in a report released Tuesday that it expects the economy to shrink 0.2 per cent this year, down from a previously expected fall of 0.1 per cent. It expects it to grow 0.8 per cent in 2014. France’s economy is currently in recession.

The IMF warned that longstanding problems — including falling productivity and profit margins — are becoming more troubling as France’s neighbours make reforms that will boost their competitiveness.

It added that France needs to continue to reduce its deficit but that it should focus on cutting spending. So far, the government has mostly relied on tax increases to close the budget hole.