Business climate 'gloomy'
The French economy, which has not grown significantly since the third quarter of 2011, will be flat in the first quarter of this year and grow just 0.1 per cent in the second quarter, INSEE estimated in its latest quarterly outlook.
Unemployment will reach 10.8 per cent in the first quarter and 11 per cent in the second quarter, its highest level since the last quarter of 1997.
France will have to depend on exports to pull itself out of the economic gloom with consumer spending faltering, construction contracting and business investment slumping, INSEE said. Exports were seen up 0.6 per cent in the first quarter and 0.7 per cent in the following three months.
"We are expecting the recovery to come from abroad, because the (French) drivers of growth have come to a stop, especially households' purchasing power," said INSEE analyst Jean-François Ouvrard.
"The business climate in France remains overall gloomy," he told a news conference.
The zero per cent forecast for the first three months of the year is a revision from INSEE's previous 0.1 per cent growth forecast.
France could also technically fall back into recession this quarter after contracting 0.3 per cent in the last three months of 2012, Ouvrard said, adding that there was as much a chance for the country's output to contract as to beat the forecast.