France: Economy falls into recession in Q1
May 15, 2013
In the first quarter, GDP fell 0.2% over the previous three-month period, according to a preliminary estimate released on 15 May. The decline followed the 0.2% drop seen in Q4, and exceeded market expectations on the downside as analysts had the economy contracting 0.1%. As a result, the economy has now entered into a technical recession, following two consecutive quarters of declining GDP.
The first quarter reading reflected a deterioration in both the domestic and the external side of the economy. Private consumption fell 0.1% over the previous period (Q4 2012: 0.0% quarter-on-quarter), whereas government consumption expanded 0.3% (Q4: +0.3% qoq). Meanwhile, gross fixed investment contracted a sharp 0.9%, which followed the 0.8% decline seen in Q4. On the other hand, changes in inventories added 0.1 percentage points to overall economic growth.
Meanwhile, the net contribution from the external sector to overall growth fell from a 0.2 percentage-point contribution in the fourth quarter to a 0.2 percentage-point detraction in the first. Exports of goods and services decreased 0.5% in Q1 (Q4: -0.7% qoq), while imports rose 0.1% (Q4: -1.3% qoq).
The government expects the economy to expand 0.1% in 2013. FocusEconomics Consensus Forecast panellists see the economy growing 0.2% this year, which is down 0.1 percentage points from last month's forecast. For 2014, panellists anticipate economic growth to inch up to 0.8%.