The French national statistics office Insee said the French economy will witness a contraction of 0.2% in the fourth quarter followed by another 0.1% contraction in the first quarter of 2012 due to the drop in investment which will push unemployment up and thereby weighs on consumer spending, yet 0.1% growth is expected to be recorded in the second quarter.

Corporate investment slipped 0.3% in the third quarter while Insee said investment by non-financial companies will slide 0.5% in the 4q and 0.6% in the 1q of next year. Household spending, on the other hand, will advance 0.1% in each of the quarters.

Regarding inflation, the rate is predicted to average 1.4% by June and 2.3% in October, according to Insee forecasts.