The French economy contracted by 0.3 per cent in the second quarter of the year, the first quarter of negative GDP growth since 2002, the government's statistical office INSEE announced on Friday.
The announcement could be the first of a series of bad news for France's economy. French radio reported Friday that the unemployment figures to be made public on Monday will be the worst in 10 years, with up to 40,000 adults added to the jobless rolls in August.
On Thursday, in a speech on the current economic crisis, French President Nicolas Sarkozy said that the turmoil in the American finance sector would affect French economic growth, joblessness and purchasing power.
He also suggested that the country could be heading for a recession, which is defined as two consecutive quarters of negative economic growth.
According to INSEE, the economic contraction in the second quarter was due in part to the second consecutive decline in household spending and a 1.7 per cent fall in exports.
Shares fell 2.1 per cent Friday on the Seoul stock exchange on general recession fears. South Korea's won dropped against the dollar.
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