With uncertainty still overshadowing eurozone's leading economies, the International Monetary Fund (IMF) on Tuesday trimmed France's growth forecast for next two years, urging officials to step up structural reforms and clinch their belt to spur growth and create jobs.

In its report on France, the IMF expected the economy to contract by 0.2 percent this year from a previous -0.1 percent forecast "amid persistent uncertainty and weakness of economic indicators."

The eurozone's main powerhouse was set to quicken its growth by 0.8 percent next year, from a previous 0.9 percent estimation.

"We expect a gradual turnaround of economic conditions in the second half of this year, but risks of a more prolonged stagnation in Europe remain elevated," the international organization noted.

Hailing Paris' recent measures of employment code and pact of competitiveness, the IMF saw that "the stability of public finances requires that the consolidation effort be continued over the medium term."

"Following three years of substantial fiscal adjustment, there is scope to moderate the pace of consolidation going forward, provided the effort is concentrated on the expenditure and backed by continued structural reforms," it recommended.

IMF called on France to bolster its "productivity gains through increased competition in product and services markets," and pursue efforts to contain public spending to cut budget gap set at 3.7 percent of the gross domestic product (GDP) in 2013.

"A powering up of the reforms launched by the government in the last six months is needed to close this gap," it said in a report after one of its regular missions.

"Other instruments should be found to lower the effective cost of hiring young workers, if not through the wage through an easing of contractual work arrangements," it added.

A week ago, the prestigious international economic research institution, the Organization for Economic Co-operation and Development (OECD), had also revised down its forecast for French economy as data showed that its growth will be weak while unemployment rise further. In the latest edition of Economic Outlook, the OECD said that France's GDP is expected to decline 0.3 percent in 2013 and rebound to a growth of 0.8 percent in 2014. It also projected that the unemployment rate in France will continue to rise to 11.5 percent.

On Wednesday, the European Commission agreed to give France two extra years to bring its budget deficit down to a target of 3 percent of GDP, in line with the European request, but urging France to step up reform, rein in public spending, renew pension system and improve competitiveness.

Fresh data showed that the 2.8-trillion-U.S. dollar economy slid into recession with a 0.2-percent decline reported in the first quarter of 2013 due to stalling households' purchasing power, poor industrial output and sluggish investment, provoking doubt on the government's financial targets of 0.1 percent of GDP this year and 1.2 percent in 2014.

Plagued by economic woes and record high unemployment rate, France is looking for the straight way to get out of the recession. So far, no effective answers are found to its economic and fiscal problems.

On tightening up his efforts to guide his country out of the economic quagmire, in his recent meeting with German Chancellor Angel Merkel, French President Francois Hollande vowed to work together with his German counterpart to map out a new joint plan to fight unemployment and strengthen competitiveness in Europe.

Aiming to improve the economic governance, the two leaders of the most powerful European economies decided to push for a full-time chief to oversee the eurozone's economic policy. In addition, they urged a swift mobilization of the 6-billion-euro (7.8-billion-U.S. dollar) fund to stimulate job creation and invest more to improve competitiveness and encourage medium and small companies to hire poorly skilled young workers.

Xinhua