France GDP Q1 2016


France: GDP growth accelerates in Q1; domestic demand reaches an over-11-year high

April 29, 2016

According to a first estimate released by the statistical office (INSEE) on 29 April, the French economy grew 0.5% in the first quarter of 2016 over the previous quarter in seasonally-adjusted terms, which followed Q4’s 0.3% increase and overshot market expectations of a softer 0.4% rise. Year-on-year, GDP growth eased slightly from a 1.4% rise in Q4 to a 1.3% expansion in Q1.

The first quarter reading was mainly the result of solid domestic demand, which offset a negative contribution of the external sector. In Q1, domestic demand tallied the highest reading in over 11 years. Private consumption in Q4 rose a staggering 1.2% over the previous quarter, which contrasted the 0.1% decline recorded in Q4. Q1’s print is the highest reading since Q4 2004. In Q1, government spending inched down from Q4’s 0.5% growth to a 0.4% increase. Meanwhile, gross fixed investment grew 0.9% in the first quarter (Q4: +0.7% quarter-on-quarter), thus reaching an over-four-year high.

The external sector recorded a less negative contribution as exports of goods and services declined at a softer rate than imports. Exports swung from a 1.0% expansion in the final quarter of last year to a 0.2% contraction in Q1. Imports, on the other hand, expanded 0.5% in Q1 (Q4: +2.1% quarter-on-quarter). Overall, the external sector’s net contribution to overall economic growth improved from minus 0.4 percentage points in Q4 to minus 0.2 percentage points in Q1.

The government expects economic growth of 1.5% in 2016 and 2017. FocusEconomics Consensus Forecast panelists expect the economy to grow 1.3% in 2016, which is unchanged from last month's forecast. For 2017, panelists forecast economic growth at 1.5%.

Author: Jean-Philippe Pourcelot, Economist

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France GDP Chart

France GDP Q1 2016

Note: Quarter-on-quarter changes of seasonally-adjusted GDP and year-on-year variation in %.
Source: National Institute of Statistics and Economic Studies (INSEE) and FocusEconomics Consensus Forecast.

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