Investment in France
France - Investment
Economy enters double dip recession in Q1
A second reading of national accounts data revealed that the economy entered a double dip recession in the first quarter of the year. GDP fell 0.1% on a seasonally-adjusted quarter-on-quarter basis, contrasting the preliminary estimate of a 0.4% increase. However, the reading marked an improvement from the prior quarter’s 1.5% contraction. On an annual basis, the economy expanded 1.2% (Q4: -4.6% year-on-year).
On the domestic front, household consumption increased 0.1% over the prior quarter, swinging from the 5.6% drop recorded in Q4 2020. This came despite lingering restrictive measures in the period. Fixed investment growth, meanwhile, came in at 0.2% in Q1 (Q4 2020: +1.7% qoq). This marked the third consecutive quarter of growth, which, despite the moderation, likely reflected rising business sentiment regarding the economic recovery and expected demand. Less positively, public consumption contracted for the second consecutive quarter, falling 0.1% (Q4 2020: -0.7% qoq).
On the external front, foreign trade dragged on the overall reading, with exports of goods and services dropping 0.2% over the prior quarter and contrasting the 4.9% expansion recorded in Q4 2020. Tighter restrictions in key trading partners’ economies dented foreign demand. Imports of goods and services, meanwhile, grew 1.1% quarter-on-quarter after expanding 2.2% in Q4 last year. All in all, the external sector deducted 0.4 percentage points from the headline reading.
Looking ahead, the French economy is projected to return to growth from the second quarter onwards. Firming domestic demand amid a pickup in private consumption and capital expenditure in the remainder of the year will buoy activity. A recovery in the tourism sector, particularly over the summer, should further boost momentum, while continued fiscal and monetary policy support should provide additional impetus. However, downside risks remain amid lingering uncertainty over the course of the pandemic, an expected pickup in the unemployment rate and potentially greater precautionary savings.
FocusEconomics Consensus Forecast panelists see the economy expanding 5.5% in 2021, which is down 0.1 percentage points from last month’s forecast, and 4.0% in 2022.
France - Investment Data
|Investment (annual variation in %)||0.9||2.5||5.0||3.2||4.3|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||0.08||0.46 %||Jan 01|
|Exchange Rate||1.12||0.65 %||Dec 31|
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