Paris - The French economy is currently in the first of three consecutive quarters of negative growth, the government's statistical office Insee said on Friday.

French GDP for the fourth quarter of 2008 is expected to fall by 0.8 per cent, followed by a drop of 0.4 per cent in the first quarter of next year, Insee said.

The French economy is then expected to shrink by only 0.1 per cent in the second quarter of 2009 as the government's economic stimulus package begins to take effect and the recession gradually ends.

According to Insee, French unemployment will climb to 8 per cent by the middle of next year as some 170,000 jobs are lost.

Insee said that the accuracy of its forecast is largely dependent on developments in the financial sector in the coming months.

"Persistent uncertainty regarding the capital value of (French) banks does not exclude a new worsening of the financial crisis. The decline in (economic) activity would then be greater and longer- lasting then foreseen," Insee said.

Other uncertainties regarding the forecast are linked to the scope and effect of the various economic stimulus plans implemented by the industrialized nations and what effect the cut in oil output of 2.2 million barrels per day announced by OPEC this week will have on the price of oil. (dpa)