France needs to step up reforms of its economy and labor market to avoid falling further behind its European neighbors, the International Monetary Fund warned Tuesday as it lowered growth projections for the country, reports The Washington Post.
In its regular assessment of France’s economy, the IMF said that it expects the economy to shrink 0.2 percent this year, down from a previously expected fall of 0.1 percent. It expects it to grow 0.8 percent in 2014, just off the previous prediction of 0.9 percent growth.
France’s economy fell back into recession in the first quarter of the year, and unemployment is at 11 percent. Edward Gardner, the chief of the IMF’s mission to France, said he did not expect unemployment to fall before the end of the year, as promised by the government.
While the IMF report said that France has made some good reforms, it warned that much more needs to be done. Productivity and profit margins have been slipping for a long time in France, but the report noted the gap between France’s competitiveness and that of its neighbors is growing.
Countries like Spain and Italy have made significant reforms in recent months, especially to their labor markets, and they will soon begin to bear fruit. That will increase the pressure on France to reform.
Read more of this report from The Washington Post.