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Economics Gazette

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October 22, 2019

Recovery of the French economy is slowing

French economyThe recovery of the French economy is slowing its pace ahead of the impending second round of presidential elections in the country. The Gross Domestic Product (GDP) grew by 0.3% on a quarterly basis, according to data from the Insee Statistical Institute. The markets expected growth of 0.4%.

At the end of 2016, the country’s economy accelerated with the revised 0.5% (from 0.4%). The corporate investment has contributed most strongly to growth this time, while consumer spending in the second largest economy in the euro area has risen by only 0.1%. On an annual basis, GDP growth reached 0.8%, a slower expansion than the 1.2% growth seen in the fourth quarter of 2016.

The decline in consumption was mainly due to the drop in energy costs by 3.8% (after an increase of 3.7% at the end of last year), as the weather in the winter of 2017 was warmer than the typical one. However, consumer spending on food products grew by 0.3% after a 0.3% decline in the last three months of last year.

At the same time, total long-term investments in the country accelerated, increasing by 0.9% after an increase of 0.6% in the fourth quarter of 2016.

The poor data on the performance of the French economy at the beginning of the year were predicted by the country’s central bank, but said it would not change its forecast for the economy’s performance for the full year. Some analysts are of the opinion that the slowdown in growth may question the strength of the Eurozone economy at the beginning of the year despite a series of strong business and consumer surveys.

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