'U.S. real estate, banks still troubled'

PARIS: The U.S. economy has not yet recovered from the financial crisis and its banking and real estate sectors still face difficulties, French Economy Minister Christine Lagarde said on Monday. Lagarde said France was downgrading its 2008 growth forecast partly because it had underestimated the impact of the U.S. crisis, and that it would now follow developments there closely.

"American banks, especially regional banks, will again see difficulty in the weeks and months ahead," she told France Culture radio. "One must be patient and attentive... to determine if the American economy, which has not finished regurgitating the effects of the financial crisis, and of which in my opinion the real estate market has not yet touched bottom, will really take off again," she added.

Figures from the U.S. government surprised markets last Thursday when a revision of second quarter GDP figures showed year-on-year growth came in at 3.3 percent on strong exports and consumer spending. France drew up its 2008 budget based on an estimated annual 1.7 to 2.0 percent gross domestic product (GDP) growth, but Prime Minister Francois Fillon said earlier on Monday that figure would be revised down to just over one percent.