• Economy

French growth beats expectations: 7 Days of Economic

Each week, the Economic Research Department of BNP Paribas reports on economic news.

  • French GDP rose 0.5% in Q1 2016
  • Household consumption French GDP growth was 0.5% q/q in Q1

French GDP growth was 0.5% q/q in Q1 2016, according to preliminary INSEE estimates published this morning. Economic growth beats expectations of 0.4% and marks an acceleration with the confirmed 0.3% growth reported in Q4 2015. The good news concerns household consumption, which swung from -0.1% in Q4 2015 to +1.2%. This was probably driven by purchasing power gains generated by the decline in oil prices, and by a catching up effect after November’s terrorist attacks, which eroded household spending in the yearend period. The other good news concerns investment, which rose 0.9% after a 0.7% increase in Q4 2015. The improvement can mainly be seen at the corporate level, while investment by public administrations slowed sharply and household investment continued to contract, albeit at a slower pace. All in all, firming domestic demand is fuelling vigorous economic growth despite the negative contribution of foreign trade, which was hit by the decline in exports. Thanks to this Q1 momentum, French growth is already poised to exceed 1% in 2016. It remains to be seen whether growth will be significantly higher. For that to happen, the global economy mustn’t slow down any further and the first signs of improvement in the job market must be confirmed.

Thibault Mercier

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