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UPDATE 2-French c.bank sees hope for recession to end this year

Published 02/07/2009, 10:28 AM

(Adds more details in paras 8-9, 13-14)

PARIS, Feb 7 (Reuters) - Easing inflation and stimulus packages adopted by governments around the world offer hope that the world economic crisis could come to an end as early as this year, French Central Bank Governor Christian Noyer said.

While the final three months of 2008 had proved especially painful, lower energy and commodity prices and, as a result, easing inflation were one reason for optimism, Noyer said in an interview broadcast by France Culture radio on Saturday.

"The stimulus plans are one of the reasons we hope the economic crisis can end relatively quickly," said Noyer, who is also a governing council member of the European Central Bank.

"There are a few reasons which make us think that it is not unreasonable to hope for an end to the recession by the end of the year, " he said.

Positive growth could creep in at the end of 2009 and be a factor next year, on average, as lower inflation boosted consumption and the effects of monetary policy actions, namely lower interest rates, by the world's central banks were felt.

Moves by many countries to ease monetary policy were already having an impact on the real economy, he said.

Conditions of financing and the property market in France were sound, he said, reiterating that the euro zone's second-biggest economy had emerged relatively well thanks to more conservative lending practices to would-be house buyers.

France's own economic stimulus plan, unveiled in December to the tune of 26 billion euros ($33.3 billion), would rapidly have an impact on the economy given it was centred on projects ready to be implemented, he said.

"From our point of view, it is a stimulus plan which should have quite a strong impact on the rise in production and, as a result, jobs," he said.

Turning to issues related to the wider euro zone, which groups 16 countries that use the euro , Noyer said it was impossible to imagine any country relinquishing membership because of budgetary strains.

"From my point of view, the solidity of the euro zone is firm," he said.

"Exit of the euro zone is unthinkable, it would have consequences that would be dramatic for the country that does it, therefore nobody is thinking of it."

Noyer also touched on the need by European countries to look to put their financial house in order once the crisis had blown over.

"Countries need quite quickly to speak clearly about the way their public finances will be rebalanced, it is very important to give confidence to the consumer." ($1=.7807 Euro) (Reporting by Tamora Vidaillet and Veronique Tison; )

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