FRANCE;LAGARDE GROW FORECASTS REVIEW

France May Have to Revise Down Growth Forecasts, Lagarde Says
By Francine Lacqua and Lorenzo Totaro

Sept. 6 (Bloomberg) -- France may have to cut its growth forecasts after the economy shrank in the second quarter and because of ``current economic circumstances,'' Finance Minister Christine Lagarde said.

``It is possible that we will have to do it in the light of the various numbers that we have landing on our desk,'' Lagarde said today in an interview in Cernobbio, Italy. ``A lot of numbers are not good. Whether we look at industrial production or surveys and polls of purchasers and heads of companies, it is pretty much downwards.''

The French economy contracted for the first time in more than five years in the second quarter as exports declined and companies cut spending. Gross domestic product of the euro- region's second-largest economy fell 0.3 percent from the first quarter, when it rose 0.4 percent, the Paris-based national statistics office Insee said Aug. 14.

Any revision to the official forecast of 1.7 percent to 2 percent growth for this year would come during preparation of the 2009 budget, Lagarde told the LCI TV channel on Sept. 1.

Europeans' confidence fell more than forecast last month as the economy teetered on the brink of a recession. An index of executive and consumer sentiment in the economic outlook dropped to 88.8 from 89.5 in July, the European Commission in Brussels said on Aug. 29.

``The price of oil has gone down tremendously in the last six weeks and that is going to help the economy'' to pick up, Lagarde said today. ``It is a mixed picture where we have a few gray and dark clouds over the horizon, but there is a lining in every cloud. I think there is a little bit of that sort of lining here and there.''

A 27 percent drop in oil prices from a July 11 record of $147.27 a barrel leaves companies with more money to spend just as a weaker euro underpins exports. The dollar this week rose to the highest this year against the euro.

``The fact that the dollar is strengthening against the euro is not bad either,'' the minister said. ``Clearly, it will help those European enterprises that export outside the euro zone to be more competitive.''