France: GDP growth moderates in Q4; economy records significant acceleration overall in 2015

According to preliminary data released by the statistical office (INSEE), the French economy grew a modest 0.2% in the fourth quarter of 2015over the previous quarter in seasonally-adjusted terms, which came in slightly below the 0.3% growth seen in Q3. The reading matched market expectations. Year-on-year, GDP accelerated slightly from a 1.1% rise in Q3 to a 1.3% expansion in Q4, which marked the fastest growth in four years. Overall, GDP rose 1.1% in 2015, which was a significant acceleration compared to the mild 0.2% expansion tallied in 2014.

The fourth quarter’s moderation was mainly the result of softer domestic demand, which more than offset a less negative contribution of the external sector. Private consumption in Q4 contracted 0.3% over the previous quarter, which contrasted the 0.4% growth recorded in Q3. Government spending remained stable in Q4 at Q3’s 0.4%. Meanwhile, gross fixed investment grew 0.8% in Q4 (Q3: 0.1% quarter-on-quarter).

The external sector recorded a less negative contribution as exports of goods and services rebounded and grew 0.6% in Q4 over the previous quarter (Q3: -0.6% qoq), while imports kept growing at a steady pace, expanding 1.6% (Q3: +1.5% qoq). As a result, the external sector’s net contribution to overall economic growth improved from minus 0.6 percentage points in Q3 to minus 0.3 percentage points in Q4.

FocusEconomics Consensus Forecast panelists expect the economy to grow 1.0% in 2016, which is up 0.1 percentage points from last month's forecast. For 2017, panelists forecast economic growth at 1.4%.