The French economy has experienced a third consecutive quarter of 0% growth. Despite economists predicting a 0.1 per cent decline a statement released by Insee – the national statistics office in Paris – revealed that increased government and company spending saw the second quarter retain the same gross domestic product figure of the first.
Although French household spending lost the 0.2 per cent gain of the first quarter, today’s data also showed that after a first quarter decline of 0.8 per cent, gross fixed capital formation rose 0.6 per cent in the second quarter.
Meanwhile, exports crept forward by 0.2 per cent, imports leapt by 1.8 per cent and public sector expenditure progressed 0.5 per cent in the second quarter.
Insee asserted that; ‘Investment by non-financial corporations is recovering after having dropped at the beginning of the year. In the public sector, investment is rising, returning to normal after being hurt by harsh weather in the first quarter. Consumer spending fell back slightly. This is notably about a decline in purchases of textiles and leather goods, though spending on services also declined, mainly on housing and restaurants.’
With the recessions of Spain and Italy pressing in and attempts to cut France’s budget deficit ongoing, this news might give President Francois Hollande a little breathing space.
Although the economy is now stagnating at 0% growth, French Finance Minister Pierre Moscovici has asserted that in the third and fourth quarters’ prospects for growth are ‘more positive’. Moscovici also stated that the government has not altered its long-term forecast for the second largest economy in Europe. They are holding on to their prediction of 0.3 per cent French growth over what remains of 2012, and maintain that expansion of 1.2 per cent in 2013 is attainable.
During an interview for Europe 1 radio, Moscovici expressed his conviction that the right steps towards growth are being made and pointed out that despite a stagnating economy France’s position is far from the weakest in the euro-zone; ‘France isn’t a recession when many of its partners are. We’re working very hard to generate a return to growth.’
The slightly better than feared GDP results for France and Germany (whose economy experienced 0.3 per cent growth) has seen both the euro and European shares rise.
Today’s data has also served to lighten the pessimistic outlook for second quarter euro-zone GDP figures, although few expect the situation to be significantly better than the 0.2 per cent contraction predicted by economists.
Comments are closed.