France: GDP contracts in Q3 following exit from technical recession in Q2
November 14, 2013
GDP contracted 0.1% in the third quarter over the previous quarter according to preliminary data released by the Statistical Institute (INSEE) on 14 November. The drop contrasted the 0.5% expansion tallied in Q2 and fell short of the flat reading the market had expected. After having exited the technical recession in Q2, the French economy's performance returned to negative figures this quarter. Revised data will be released on 10 December.
The contraction in the third quarter was driven by a deterioration in both domestic and external demand. Domestic demand growth was flat in Q3. Private consumption increased only 0.2% quarter-on-quarter in seasonally-adjusted terms (Q2: +0.4 quarter-on-quarter). Public consumption increased just 0.2% (Q2: +0.4 qoq), marking the lowest expansion in nearly two years. In addition, fixed investment fell 0.6% over the previous quarter in seasonally-adjusted terms (Q2: -0.4% qoq).
On the external side of the economy, a 1.5% drop in exports (Q2: +1.9 qoq) and a 1.0% increase in imports (Q2: +1.6% qoq) drove the external sector contribution to GDP growth to minus 0.7 percentage points (Q2: plus 0.1 percentage points), the weakest print since Q2 2011.
The government expects the economy to expand 0.1% in 2013. FocusEconomics Consensus Forecast panelists see the economy growing 0.1% this year, which is unchanged from last month's forecast. For 2014, panelists expect that economic growth will inch up to 0.9%, which is up 0.1 percentage points from last month's estimate.