France: Q1 economic growth revised upwards
June 23, 2017
According to the third estimate released by the Statistical Office (INSEE) on 23 June, Q1 GDP was revised upwards from a 0.4% seasonally-adjusted quarter-on-quarter expansion to 0.5% (Q4: +0.5% qoq). This print, which is just slightly above FocusEconomics’ Consensus Forecast of 0.4%, reflects a slowdown in the domestic economy and an abysmal performance by the external sector. In annual terms, the economy expanded 1.0% in the first quarter (Q4: +1.2% year-on-year).
A sharp deceleration in private consumption and a contraction in manufacturing were the main reasons behind the weak performance of the domestic economy. Growth in private consumption plunged from a 0.6% expansion to a revised flat reading in Q1 (previously reported: +0.1% qoq). A sharp drop in the use of energy products owing to unseasonably-warm temperatures during the winter months and purchases of manufactured goods were behind the weak expansion. The soft reading comes despite survey-based consumer confidence resting at a multi-year high throughout the first quarter. Fixed investment grew a solid 1.2% on the back of a strong increase in business and private investment, although it failed to provide much impetus. Overall, the contribution of domestic demand to economic growth in the first quarter dropped by 0.2 percentage points to 0.4 percentage points.
The external sector remains the weakest spot in the economy. Exports nosedived from a 1.1% expansion to a sharp 0.7% drop, as overseas demand for transport equipment declined notably. Imports growth, on the other hand, picked up steam and accelerated on the back of higher purchases of refined petroleum products and other industrial material (Q4: +0.6%; Q1: +1.2% qoq). Overall, the external sector deducted 0.6 percentage points from growth (Q4: +0.1 percentage points).