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

According to second estimates released by the statistical office (INSEE), the French economy grew a modest 0.3% in the fourth quarter of 2015 over the previous quarter in seasonally-adjusted terms, which matched the 0.3% growth seen in Q3. The reading slightly overshot market expectations of a softer 0.2% increase. Year-on-year, GDP accelerated from a 1.1% rise in Q3 to a 1.4% 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 0.2% over the previous quarter, which contrasted the 0.5% growth recorded in Q3. Growth in government spending inched up from 0.4% in Q3 to 0.5% in Q4. Meanwhile, gross fixed investment grew 0.7% 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 1.0% in Q4 over the previous quarter (Q3: -0.6% qoq). Imports expanded 2.5% in Q4 (Q3: +1.7% qoq). As a result, the external sector’s net contribution to overall economic growth improved from minus 0.7 percentage points in Q3 to minus 0.5 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%.