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.