NEW YORK - Europe's faltering economy received another blow Friday when Standard & Poor's Rating Services lowered its outlook on France's credit, saying the country's economic picture is dimming.
In cutting its rating on French debt to "negative," from "stable," the firm said the country's economy may have trouble recovering because its government may not be able to implement reforms that will lead to growth.
"The outlook revision reflects our view of receding fiscal space for the French government in light of the economy's constrained real and nominal growth prospects against the background of policy implementation risk," S&P said in explaining the ratings action.
Standard & Poor's is maintaining an "AA" rating on the French economy. That is its third-highest possible rating, and it says France is productive, has high per-capita income, low levels of household debt and high levels of private-sector domestic savings.
Still, France's economy is gearing down. S&P lowered its projections of France's economic growth over the next three years and predicted that the nation's government deficits will take up a larger portion of its GDP. The firm forecast average real growth for the French economy of only 1.2 percent through 2017, down from a previous estimate of 1.3 percent. It expects the country's GDP to expand an anemic 0.5 percent this year and 1.1 percent in 2015.
The International Monetary Fund said this week that global growth is slowing, pinpointing Europe as one of the world's trouble spots. It predicted a "gradual, but weak" recovery for the region in the years ahead, with projected annual output in France of 1.4 percent this year and only 1.5 percent in 2015.