French architecture in France

France GDP Q2 2023

France: GDP growth records best result since Q3 2021 in Q2

A second estimate confirmed that GDP growth improved to 0.5% on a seasonally adjusted quarter-on-quarter basis in the second quarter, from Q1’s flat reading. The print marked the fastest expansion since Q3 2021.

Government consumption rebounded to 0.4% in Q2 (Q1: -0.3% s.a. qoq). Meanwhile, household spending fell 0.5% in the second quarter, which was below the first quarter’s 0.1% reading. Fixed investment contracted 0.1% in Q2, up from the 0.3% decrease in the prior quarter. Domestic demand detracted 0.2 points from the headline figure, down from minus 0.1 in the prior quarter. In contrast, inventory changes contributed 0.4 points, up from a negative 0.3 impact in Q1.

On the external front, exports of goods and services bounced back, growing 2.7% seasonally adjusted quarter on quarter in the second quarter, which marked the best reading since Q4 2021 (Q1: -1.7% s.a. qoq). The rebound was spearheaded by a recovering automobile sector. In addition, imports of goods and services rebounded, growing 1.6% in Q2 (Q1: -2.5% s.a. qoq). The external sector contributed 0.3 points to the overall reading, down from a 0.4-point contribution in Q1.

On an annual basis, economic growth accelerated to 1.0% in Q2, following the previous period’s 0.8% increase.

Analysts at the EIU commented on the outlook:

“We forecast real GDP growth in France of 1% in 2023, down from 2.5% in 2022. The main reason for the slowdown will be weak private consumption, which we expect will contract by 0.2% on average in 2023. This will reflect still-elevated inflation—EU harmonised inflation accelerated to 5.7% year on year in August, up from 5.1% in July—eroding real household disposable incomes. This trend will be made worse by much higher borrowing costs, as the European Central Bank (ECB) attempts to curtail inflation.”

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