France: GDP unexpectedly contracts in Q4 2019
The economy contracted a seasonally-adjusted 0.1% quarter-on-quarter in the last three months of last year (Q3: +0.3% quarter-on-quarter, seasonally-adjusted), according to a first estimate released by the French Statistical Institute (INSEE) on 31 January. Analysts had expected a 0.2% expansion. In year-on-year terms, the economy expanded 0.9% in Q4, down from 1.4% in Q3; meanwhile, taking 2019 as a whole, GDP growth decelerated to 1.2%, down from 2018’s 1.7% expansion.
The downturn chiefly reflected a third consecutive quarterly fall in inventories (Q4: -0.4% qoq s.a.; Q3: -0.1% qoq s.a.), amid expectations of subdued demand ahead. Meanwhile, household spending growth halved to 0.2% from 0.4% in Q3, as country-wide strikes against President Macron’s pension reform hindered consumption. Furthermore, fixed investment growth slumped to 0.3% (Q3: +1.3% qoq s.a.), the slowest expansion since Q1 2018, as both household and government investment ebbed. On the upside, government consumption sustained its momentum in Q4 (Q4: +0.5% qoq s.a., Q3: +0.5% qoq s.a.).
On the external front, exports contracted for the third consecutive quarter in Q4 (Q4: -0.2% qoq s.a.; Q3: -0.3%), while imports swung to contraction from a healthy expansion a quarter prior (Q4: -0.2% qoq s.a.; Q3: +0.6% qoq s.a.). Taken together, the external sector made a neutral contribution to overall growth, after having subtracted 0.3 percentage points in Q3.