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France: Economy stagnates in Q2 according to preliminary estimate

August 14, 2014

GDP growth in Q2 was flat over the previous quarter in seasonally-adjusted terms, according to preliminary data released by the Statistical Institute (INSEE) on 14 August. The print, which mirrored Q1’s result, fell short of the meager 0.1% increase the market had expected. On an annual basis, GDP expanded a paltry 0.1% in Q2, which was down from the 0.8% rise seen in Q1 2014.

Although domestic demand improved compared to the previous month, it was offset by the deterioration in the external sector. Domestic demand rebounded from a 0.4% contraction in Q1 to a 0.2% expansion in Q2. It was mainly backed by the expansions tallied in private consumption (Q2: +0.5 quarter-on-quarter; Q1: -0.5% qoq) and government consumption (Q2: +0.5% qoq; Q1: +0.4% qoq). However, fixed investment continued to contract in Q2. It fell 1.1% in the second quarter, which was down from the 1.0% drop seen in the first quarter.

The external sector’s net contribution to overall growth deteriorated from a flat reading in Q1 to minus 0.1 percentage points in the second quarter. Growth in exports of goods and services was flat in Q2 (Q1: +0.5% qoq), while imports rose 0.4% (Q1: +0.6% qoq).

FocusEconomics Consensus Forecast panelists expect the economy to grow 0.7% in 2014, which is down 0.1 percentage points from last month's forecast. For 2015, panelists forecast economic growth at 1.3%.


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France GDP Q2 2014

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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