France: Economy stalls in the second quarter
August 12, 2011
In the second quarter, GDP was unchanged over the previous quarter, according to the first estimate released by the National Institute of Statistics and Economic Studies (INSEE, Institut National de la Statistique et des etudes economiques). The reading contrasted the 0.9% expansion recorded in the first quarter as well as market expectations, which had the economy expanding 0.3%. On an annual basis, the economy grew 1.6% in the second quarter, down from the 2.1% annual rise recorded in the previous quarter. The second quarter figure reflected an improvement in the external sector which wholly offset a deterioration in domestic demand. Private consumption contracted 0.7% over the previous period (Q1: +0.4% quarter-on-quarter), while gross fixed investment rose 0.9%, slower than the 1.2% expansion observed in the previous quarter. Meanwhile, the contribution of inventory changes swung from plus 0.8 percentage points in the first quarter to zero. In contrast, the net contribution of the external sector to overall growth swung from minus 0.4 percentage points in the first quarter to plus 0.3 percentage points in Q2, as imports deteriorated more markedly than exports. INSEE expects the economy to expand 2.1% this year, according to its quarterly economic outlook from June. However, the government recently cut its 2011 economic growth forecast from 2.0% to 1.75% and expects the same level for 2012.