French gross domestic product is expected to shrink 0.1 per cent in the last quarter of 2012, tipping the second-largest economy in the euro zone into recession, according to an October survey by the Bank of France.

The central bank has already predicted a similar 0.1 per cent dip in the third quarter.

In its latest survey results, published today, the Bank of France also said a separate index of business sentiment in the industrial sector held steady at 92 in October.

The new fourth-quarter GDP forecast sets the scene for two straight quarters of contraction, which is generally considered by economists as a recession.

The government predicts 0.3 per cent GDP growth this year and is counting on 0.8 per cent growth in 2013, compared to European Commission forecasts respectively of 0.2 per cent and 0.4 per cent in 2012 and 2013.

Reuters