The French economy entered recession in the Q1 as manufacturing and exports continued to suffer the impact of the global economic slowdown.

According to national statistics agency INSEE, the euro zone's second largest economy contracted by 1.2% in the first three months of the year as compared to the previous quarter and by 1.5% in the fourth quarter of 2008.

Mr Christine Lagarde Finance Minister of France in a statement following the INSEE report said that French economy is now on track to contract by 3% in 2009. That's double the government's previous forecast of a 1.5% decline this year and follows the mere 0.3% growth recorded in 2008.

Mr Lagarde said the government’s forecasts are now in line with those of international organizations, which foresee a gradual economic recovery in 2010.

INSEE said that French manufacturing continued its sharp slowdown in the first quarter, with automobile production down 12.8% on the quarter. Exports shrank by 7.2% while consumer spending growth was stable at 0.2%.

(Sourced from Associated Press)